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Also by Robert I. Friedman 


Zealots for Zion : Inside Israel s 
West Bank Settlement Movement 


Copyrig ht 


Copyright © 2000 by Robert I. Friedman 

All rights reserved. No part of this book may be reproduced in any form or by any electronic or 
mechanical means, including information storage and retrieval systems, without permission in writing 
from the publisher, except by a reviewer who may quote brief passages in a review. 

Warner Books, Inc., 

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New York, NY 10017 

Visit our website at www.HachetteBookGroup.com 
First eBook Edition: November 2009 


ISBN: 978-0-316-09287-6 


To Christine 



Contents 


Also By Robert I. Friedman 

Copyright 

Acknowledgments 

Introduction: The Superpower of Crime 


Part One: The Invasion 


1 : The Hit Man 

2: The Little Don 

3: Brighton Beach Goodfellas 

4: Operation Red Daisy 

5 : Red Tide 
6: Invasion of America 

7: Tarzan 


P art T wo: Colonization and C onquest 

8: Power Play 
9: The Money Plane 

10: The World’s Most Dangerous Gangster 

1 1 : Global Conquest 


Postscripts: God Bless America 


ACKNOWLEDGMENTS 


I would like to thank the following organizations for their support: the Dick Goldensohn Fund, the 
Fund for Investigative Journalism, and the Committee to Protect Journalists. 

I would also like to thank Michael Caruso, Tim Moss, Jim Rosenthal, and my agents Kris Dahl at 
International Creative Management and Eric Simonoff at Janklow & Nesbit Associates. 


INTRODUCTION 


THF SIIPFRPOWFR OF CRTMF 


I had just returned from a vacation in June 1998 when I found out how dangerous it is to investigate 
the Russian mob. Mike McCall, a top agent on the FBI’s Russian Organized Crime Squad in 
Manhattan, called me with chilling news. “I hate to be the bearer of bad tidings,” he said gently, “but 
the FBI has reliable information that a major Russian organized crime figure has taken out a contract 
on your life.” 

Belgian journalist Alain Lallemand, an expert on Russian organized crime who has suffered 
through hair-raising attempts on his life, once told me that the Russian mob would leave journalists 
alone as long they didn’t come between the mobsters and their money. In a series of revelatory 
articles about the growing threat of the Russian mob in such publications as New York, Details, and 
Vanity Fair, I had apparently crossed this dangerous line. 

Stunned, I finally managed to ask McCall what I was supposed to do in response. “We are 
working on this just as hard as we can,” he answered, “but right now we can’t preclude the 
possibility of something happening to you, okay?” But how could I protect myself — and my wife? 
McCall bluntly replied that it wasn’t the FBI’s responsibility to offer that kind of advice. After some 
pleading, he at last offered a tip: “If you have the opportunity to lie low,” he said simply, “take it.” 

At the time, I was getting ready to fly to Miami to interview a Russian crime lord nicknamed 
Tarzan, a man who had sold Russian military helicopters to Colombian drug barons and was in the 
process of brokering a deal to sell them a submarine, complete with a retired Russian captain and a 
crew of seventeen, when he was arrested by the Drug Enforcement Agency. McCall told me to forget 
about the trip to Miami, which has the second largest concentration of Russian mobsters in the United 
States; a hit man could easily trace me to my South Beach hotel. For that matter, he said, I should also 
forget about doing any more interviews in Brighton Beach, Brooklyn — ground zero for the Russian 
mob in America. In fact, he advised, I should consider forgetting doing any more reporting at all on 
the subject. 

The next day, a magazine that had just published one of my exposes of the Russian criminals 
generously supplied me with some getaway money and a bulletproof vest. Before I could flee town, 
however, I noticed a thickly bearded, muscular Russian loitering around my apartment building whom 
I was certain I had once seen in the company of a notorious Russian don nicknamed Fat Felix. I didn’t 
waste any more time. I quickly collected my wife and drove up to a rented hideaway in Vermont. 

One week spent pacing the floors of our retreat left me restless and upset, and I resolved not to be 
intimidated into silence or to spend another day underground. Despite the risk, I returned to my home. 


As far as the FBI was concerned, however, I was on my own; they refused to tell me anything further 
about the death order, feebly explaining that the bureau couldn’t jeopardize its “sources and 
methods.” One sympathetic DEA agent suggested that I buy myself a. 357 revolver; as he explained, 
although it flares when it’s fired and there is quite a jolt, it’s more reliable than an automatic, which 
can jam if not constantly cleaned. 

I later learned (though not through the FBI) that the author of the anonymous death threat against me 
was Semion Mogilevich, the Budapest-based leader of the Red Mafiya, the most brilliant and savage 
Russian mob organization in the world. It was after I had written a long expose of his criminal career 
in The Village Voice that he put out a contract on my life, a threat that was picked up during a 
telephone intercept by the Central Intelligence Agency, according to the New York Times. A European 
law enforcement official told the Times that the contract was for $100,000. At least one key witness 
in the murder plot was killed before he could testify against Mogilevich, the Sunday Times of London 
reported. 

I first began exploring the shadowy world of Russian organized crime in the late 1 980s. I had 
spent much of my career documenting the primordial struggle between Palestinians and Jews over a 
tiny, bloodstained strip of land on the Mediterranean that both sides passionately love and call home. 
On occasion, I’d tackle such diverse stories as AIDS, prostitution, and political corruption in India. 
While working on an Italian Mafia story, I was introduced by a Genovese organized crime family 
source in New York to several of his Russian criminal colleagues, a meeting that opened a door for 
me into this little known, nearly impenetrable ethnic underworld. I found them to be devilishly 
crooked wunderkinder, who in a few years’ time, I suspected, could establish a New World Criminal 
Order. Over the following years, I ventured into the Russians’ gaudy strip clubs in Miami Beach; paid 
surprise visits to their well-kept suburban homes in Denver; interviewed hit men and godfathers in an 
array of federal lockups; and traveled halfway around the world trying to make sense of their tangled 
criminal webs, which have ensnared everyone from titans of finance and the heads of government to 
entire state security services. 

In the sheltered, seaside community of Brighton Beach, I had become a polite, but persistent pest. 
One Brighton Beach mobster tried to bribe me; another tied me up in a frivolous, though costly, libel 
suit; other Russian wiseguys tried to scare me off with angry, abusive invective. Several gangsters 
simply accused me of being biased against Russian emigres — a ridiculous accusation, as all four of 
my grandparents were Jews who fled czarist Russia for America to escape religious persecution. 

Ironically, the first wave of Russian mobsters used the same excuse to gain entry to America. 
During the detente days of the early 1970s, when Soviet leader Leonid Brezhnev had agreed to allow 
the limited emigration of Soviet Jews, thousands of hard-core criminals, many of them released from 
Soviet Gulags by the KGB, took advantage of their nominal Jewish status to swarm into the United 
States. The majority settled in Brighton Beach, where they quickly resumed their cruel criminal 
vocation. 

The Russian mob may act like Cossacks, but I never seriously considered running away an option. 
Yet then I received a second, particularly violent death threat: “Friedman! You are a dirty fucking 
American prostitute and liar! I WILL FUCK YOU! And make you suck my Russian DICK!” The 
obscenity-laced note was placed inside a Hallmark Valentine Day’s card that teased: “It was easy 
finding a Valentine for someone like you.” The author of the threat hadn’t bothered to hide his identity. 



It was signed Vyacheslav Kirillovich Ivankov. 

The FBI has described Ivankov as the most powerful Russian mobster in the United States. Before 
coming to the U.S. in 1992, he spent many years in the Gulag for a number of gruesome crimes, 
including torturing his extortion victims, and he had personally ordered the killing of so many 
journalists, police, and civilians in Russia that a ruling council of mob bosses banished him to 
America. He arrived with several hundred no-neck thugs led by a former KGB colonel. Using his 
considerable intelligence and muscle, Ivankov quickly seized control of the Russian Jewish mob, 
which by then had grown from a neighborhood extortion racket in Brighton Beach to a brutal, 
innovative, multibillion-dollar-a-year criminal enterprise. 

Despite his conviction in 1996 of extorting two Russian Wall Street investors, and his subsequent 
sentencing to a prison term in a federal penitentiary until 2005, Ivankov, according to the FBI, had 
continued to issue commands from his upstate New York cell, ordering the execution of his enemies 
and underworld rivals. When he mailed me the handwritten death threat, the fifty- nine -year-old 
gangster was so brazen that he included his cell block unit and prison ID number. 

This time, I phoned the FBI. McCall rushed to my cramped New York apartment, where he 
gingerly picked up the caustic message with rubber gloves, placing it into a clear plastic folder. The 
bureau later considered making Ivankov’s mordant valentine part of a multicount federal indictment 
against the godfather. “Our idea is to put him away for life,” an FBI agent told me, explaining that, the 
longer Ivankov was in jail, the less sway he’d have over his criminal comrades. I was asked whether 
I’d be willing to publicly testify against the Russian. “If it makes you feel any better, I’m on his hit 
list, too,” admitted one top FBI official in Washington. In fact, as one of the two agents who put 
Ivankov in prison, so was Mike McCall. But of course, they both had badges — and guns. Still, I 
agreed to testify, fully aware of the fact that the witnesses who had stood up against Ivankov in the 
Wall Street extortion case were now living secretly in the Federal Witness Protection Program 

However perilous the situation into which I was placing myself, I was aware that in Europe and 
the former Soviet bloc, the dangers faced by journalists are far, far worse. “Journalists pursuing 
investigative stories on corruption and organized crime have found themselves at great risk,” stated a 
1997 report from the New York-based Committee to Protect Journalists, “especially in Russia and 
Ukraine, where beatings have become routine. These physical assaults have had the expected chilling 
effect on investigative journalism, frightening some reporters into self-censorship or even quitting the 
profession, while many have resorted to using pseudonyms.” 

In all, thirteen journalists from the Russian Federation have been killed by the mob since the fall 
of communism, according to the committee. In one of the worst incidents of intimidation, Anna 
Zarkova, a forty-year-old award-winning crime reporter, had sulfuric acid hurled in her face in 
downtown Sofia in May 1998. From her hospital bed, now blind in one eye, the mother of two 
appealed to her colleagues not to be cowed into silence. “If they don’t splash acid in your face as a 
journalist,” she said, “tomorrow they will kill you in the street as a citizen. That’s how crime 
escalates in this country.” 

Russian mobsters, in the United States, simply don’t play by the unwritten rules of the acceptable 
uses of gangland violence. Rarefy has the Italian Mafia, for instance, inflicted harm on a member of 
the American media, prosecutors, or judges, fully aware of the retaliation that would likely result. 

The Russians, however, have no such prohibition. Murder, for them, is a blood sport. “We Italians 
will kill you,” a John Gotti associate once warned a potential snitch over a government wire. “But the 



Russians are crazy — they’ll kill your whole family.” Some eighty Russian mob-related murders still 
languish unsolved on the books in Brooklyn alone. “The Russians are ruthless and crazy,” a retired 
New York City cop told me. “It’s a bad combination. TheyTl shoot you just to see if their gun works.” 

It is no small irony that the FBI has become my guardian angel, for if not for its own sluggishness 
in addressing the problem, the Russian mob in the United States would never have become as 
powerful as it is today. Though FBI boss Louis Freeh has said that Russian criminals pose an 
“immense” strategic threat to America, the bureau didn’t even set up a Russian organized crime squad 
in New York until May 1994, long after the Russian mob in America was well entrenched. It should 
perhaps come as no surprise that the FBI, which likewise failed to go after La Cosa Nostra for thirty- 
five years, is now playing a desperate game of catch-up. 

Blending financial sophistication with bone-crunching violence, the Russian mob has become the 
FBI’s most formidable criminal adversary, creating an international criminal colossus that has 
surpassed the Colombian cartels, the Japanese Yakuzas, the Chinese triads, and the Italian Mafia in 
wealth and weaponry. “Remember when Khrushchev banged his shoe on a table at the U.N. and said 
he would bury the West?” a baby- faced Russian gangster once asked me in a Brighton Beach cabaret. 
“He couldn’t do it then, but we will do it now!” 

With activities in countries ranging from Malaysia to Great Britain, Russian mobsters now operate 
in more than fifty nations. They smuggle heroin from Southeast Asia, traffic in weapons all over the 
globe, and seem to have a special knack for large-scale extortion. The Russian mob has plundered the 
fabulously rich gold and diamond mines in war- torn Sierra Leone, built dazzling casinos in Costa 
Rica with John Gotti Jr., and, through its control of more than 80 percent of Russia’s banks, siphoned 
billions of dollars of Western government loans and aid, thereby exacerbating a global financial crisis 
that toppled Wall Street’s historic bull market in August 1998. 

Tutored in the mercenary ways of a brutal totalitarian state riddled with corruption, the Russians 
have developed a business acumen that puts them in a class by themselves. Many of today’s foremost 
Russian mobsters have Ph.D.’s in mathematics, engineering, or physics, helping them to acquire an 
expertise in advanced encryption and computer technology. “Hell,” a senior Treasury Department 
official remarked, “it took them about a week to figure out how to counterfeit the $100 Super Note,” 
which was unveiled in 1997 with much fanfare as “tamper-proof.” 

More ominously, U.S. intelligence officials worry that Russian gangsters will acquire weapons of 
mass destruction such as fissionable material or deadly, easily concealed pathogens such as the 
smallpox virus — all too readily available from poorly guarded military bases or scientific labs — 
and sell these deadly wares to any number of terrorist groups or renegade states. 

In North America alone, there are now thirty Russian crime syndicates operating in at least 
seventeen U.S. cities, most notably New York, Miami, San Francisco, Los Angeles, and Denver. The 
Russians have already pulled off the largest jewelry heist and insurance and Medicare frauds in 
American history, with a net haul exceeding $1 billion. They have invaded North America’s financial 
markets, orchestrating complex stock scams, allegedly laundering billions of dollars through the Bank 
of New York, and coolly infiltrating the business and real estate worlds. The Russian mob has even 
penetrated the National Hockey League, where many players have either been its victims or become 
Mafiya facilitators, helping the mob sink its roots further into American soil. There is even fear that 
NHL games may be fixed. “The Russians didn’t come here to enjoy the American dream,” New York 
State tax agent Roger Berger says glumly. “They came here to steal it.” 



Russian mobsters in the United States aren’t just Italian wiseguy wannabes. Merging with the even 
more powerful Mafiya groups that have flourished in post-perestroika Russia, they have something La 
Cosa Nostra can only dream about: their own country Just as Meyer Lansky ran Cuba for a short time 
until Castro seized power in 1959, the Russian mob virtually controls their nuclear-tipped former 
superpower, which provides them with vast financial assets and a truly global reach. Russian 
President Boris Yeltsin wasn’t exaggerating when he described Russia as “the biggest Mafia state in 
the world” and “the superpower of crime.” 

In 1993, a high-ranking Russian immigration official in Moscow told U.S. investigators that there 
were five million dangerous criminals in the former U.S.S.R. who would be allowed to immigrate to 
the West. It’s nearly impossible for the State Department to weed out these undesirables because the 
former states of the Eastern bloc seldom make available the would-be emigre’s criminal record. 

“It’s wonderful that the Iron Curtain is gone, but it was a shield for the West,” Boris Urov, the 
former chief investigator of major crimes for the Russian attorney general, has declared. “Now we’ve 
opened the gates, and this is very dangerous for the world. America is getting Russian criminals. 
Nobody will have the resources to stop them. You people in the West don’t know our Mafiya yet. You 
will, you will!” 

* * * 

For nearly a year, the FBI promised to prosecute Ivankov for his death threat — or at least punish 
him by taking away some of his basic privileges. When they refused to act, I went to the Committee to 
Protect Journalists, which contacted the New York Times. On March 5, 1999, Pulitzer Prize-winning 
reporter Blaine Harden wrote a front-page Metro section story about the death threats. “I was a good 
soldier for a long time,” I told Harden, “but then I felt like a billy goat on a stake. I have been 
exposed too long and the people making these threats have gone unpunished too long.” 

Within days after Harden called the FBI for comment, Ivankov was transferred in the middle of the 
night from his comfy cell at Ray Brook Correctional Institution, a medium- security federal prison near 
Fake Placid, New York, to the maximum-security prison at Fewisburg, Pennsylvania. The Times 
reported that Fewisburg would impose considerably tighter security restrictions on him because of 
the threat. “I want him to know I am behind this punishment,” I told the Times. “And I want him to 
know that he cannot threaten the American press the same way the Mafiya does in Russia.” 



PART ONE 


THF, INVASION 


1 


THF, HIT MAN 


On a spring day when warm sunshine flooded the narrow, potholed streets, I took a taxi to 
Metropolitan Correctional Center (MCC), an imposing collection of tomblike cinder block towers in 
lower Manhattan, to interview Monya Elson — one of the most dangerous Russian mobsters the feds 
ever netted. I passed through several layers of security before I was shepherded by an armed guard up 
an elevator and deposited in a small, antiseptic cubicle with booming acoustics where lawyers meet 
their clients. I had a tape recorder and four hours of Memorex. At least half a dozen armed guards 
stood outside the door, which was closed but had an observation window. 

Elson, an edgy man with a dark mien, was brought into the room, his hands and feet chained. He is 
considered a maximum- security risk, and for good reason: a natural-born extortionist and killing 
machine, Elson is perhaps the most prolific hit man in Russian mob history, making Sammy “the Bull” 
Gravano, with nineteen acknowledged hits, a mere piker. Elson boasts one hundred confirmed kills, a 
figure the authorities don’t dispute. With his dour- faced wife, Marina, Elson would allegedly go out 
on murderous rampages, rumbling around Brooklyn in the back of a van. After flinging open its doors, 
they would gleefully execute their shakedown victims, a la Bonnie and Clyde. 

“It was a sex thing,” claims a Genovese goodfella who worked closely with Elson. “They got off 
on the withering bodies.” 

Elson emigrated from the Soviet Union in 1978, claiming Jewish refugee status, and settled in 
Brighton Beach, Brooklyn. His mission: to become the most legendary gangster of all time. “Nobody 
remembers the first man who walked on the moon,” Elson explains. “Everybody remembers A1 
Capone.” 

Elson wore a drab brown prison uniform; his close-cropped hair, formerly thick and black, had 
thinned and turned salt-and-pepper like his mustache. His once handsomely roguish face was puffy 
and pale. Cyrillic letters were tattooed onto each finger, identifying him as a made man in the Russian 
mob. 

When the last prison guard left the room, Elson, his hands unshackled, scooped me up in a bone- 
jarring Russian bear hug, kissing me on both cheeks. He was enormously strong. Elson granted me an 
interview, in part, because my maternal grandfather was from Kishinev, Elson’s hometown. “Oh, we 
have the same blood!” he said. “But it went in a different direction. I come from a different culture. I 
am a criminal. And for you this is bad: you were raised to believe in the law. What is good for you is 
not good for me. I am proud of what I am.” 

Elson suddenly started pulling off his shirt and pants. “Look here! Look here!” he shouted 
excitedly, showing off his battle trophies. Pointing to a crater from a dumdum bullet near his heart, he 


boasted, “It’s still inside. And look at this: I was shot all over. It wasn’t a joke. The pain in my arm 
from a shooting goes through me like electricity on wet and humid days. It really hurts.” 

Elson was most proud of a large tattoo that covered his right shoulder. It depicted an anguished- 
looking skeleton immersed in a vat of acid, desperately reaching up to grasp two angels hovering 
above. “In this world, a young man seeks a name,” said Elson, laying out his bleak criminal 
philosophy. “When he has found a name, he seeks money. When he has found money, he seeks power. 
But when he has power, he doesn’t wish to lose it.” Elson has spent his career clawing over the 
corpses of his enemies, trying to reach the top rung of Russian organized crime — a metaphorical 
place he calls the “warm spot.” 

MCC hadn’t dampened Elson’s egomania. He wanted to know what every wiseguy I interviewed 
had to say about him 

“You spoke to somebody about me?” Elson asked, playing with an empty plastic ashtray. 

“Of course.” 

“Don’t say to whom. But what did they say? Tell me description. Don’t tell me who because I’ll 
lose my patience.” 

“They say you’re a hit man, professional, one of the best,” I replied. 

“Brave. Tough.” 

“Also cruel.” 

“Unforgiving,” Elson added. “But fair or not? I never touched an innocent person. Or they said that 
I did? People say I don’t have feelings, that I don’t give a fuck. It’s not true. It’s not true. First of all, if 
you don’t have feelings you’d have to be a Hitler, or you’d have to be a Stalin. But when you lead the 
kind of criminal life where somebody wants to kill you, that somebody wants to take your warm spot. 
You cannot let them I don’t kill people for fun. That’s not true. . .” 

Elson suddenly became sullen, irritable; his mouth twisted into a tight sneer. “This place is like a 
mental institution,” he moaned with disgust. Prison was eating into his soul, although he denied that he 
was having a hard time dealing with it. “Eve been fighting since I was eleven years old. I’m a fighter. 
I’m not a punk.” 

Elson was born to a Jewish family two years before Stalin’s death, on May 23, 1951. Kishinev, 
the fivecenturies-old city on the banks of the river Dnestr, was a town without pity for Jews. A 
pogrom on April 3, 1903, incited by the czar’s minister of the interior Vyacheslav von Plehve, killed 
more than fifty Jewish residents; scores of Jewish women were raped by pillaging Cossack 
horsemen. The pogrom was memorialized in an epic poem by Bialik, in which he lamented the plight 
of the Diaspora Jew as “the senseless living and the senseless dying” in a world that would always 
remain hostile to them. Bialik underscored the Jewish people’s deep yearnings for an independent 
homeland — or a ticket to safety in the West. 

From the time that he was a boy, Elson instinctively recognized that there was only one way out of 
the Jewish ghetto: to excel at crime. He grew up in a rough neighborhood, which grew even rougher 
when, the year before he died, Stalin released thousands of inmates from the Gulag into the district. 
These hooligans became Elson’s heroes. “We had guys who were like the kings of the neighborhood. 
Tough guys. They were fighters. They weren’t afraid of the police. And in every conversation they 
spoke about jail. How to survive the Gulag. How to be independent of the law Russia imposed on 
you. When you grow up and you hear only bad things about the government, and the words were 



coming from cruel people who had passed through the harshest system in the world — the Gulag, the 
Stalin regime, and World War II — this environment, of course, has some influence on you. Because 
every kid, as I understand it, in any country, wants to be tough, wants to be famous, wants to be strong 
somehow.” The songs Elson relished as a youth were not communist odes to the motherland, but 
rather, criminal folk songs with lyrics like: “This street gave me the nickname thief and gradually put 
me behind bars.” 

Given the gross inequities of communism, where corruption wasn’t just widespread but the 
business of the state, it was almost inevitable that the Soviet Union would be plagued by an almost 
institutionalized culture of thievery. As Pulitzer Prize winner David Remnick, a former Washington 
Post correspondent in Moscow, has portrayed the situation, “It was as if the entire Soviet Union were 
ruled by a gigantic Mob family known as the C.P.S.U. [Communist Party of the Soviet Union].” 
Beneath the thin veneer of official communism lay a vast underground economy of off-the-book 
factories, food co-ops, and construction companies that were the basis of the burgeoning black market 
in everything from medicines to foodstuffs. Store and restaurant managers, directors of state 
enterprises, officials of local, regional, and even national party institutions, and operators of 
collective and state farms all trafficked in illegal business. Corruption was so pervasive in the Black 
Sea port of Odessa, historically a major seat of organized crime in Russia, that the first secretary of 
the city’s party committee was sentenced to death in the early 1970s for black-marketeering. 

By the end of the Brezhnev period, the underground sector of the economy accounted for as much 
as 50 percent of the personal income of Soviet workers. But it was the apparatchiks and black 
marketeers who profited the most, living like feudal lords in ornate hilltop palaces and summer 
villas, relaxing in private sanatoriums, shopping in special stores filled with Japanese consumer 
goods, and traveling abroad — the most coveted privilege in the restrictive Soviet Union. But the 
black marketeers weren’t only ambitious Russians with an entrepreneurial bent; they often included 
nationally renowned members of the intelligentsia, sports stars, chess champions, and the cream of the 
art and entertainment worlds. These individuals would journey overseas under the patronage of a 
friendly politician, bringing back choice wares like Citroen cars, motorboats, and designer fashions 
for resale. Many became multimillionaires. 

Unsurprisingly, the State, while officially denying the existence of crime, tolerated the criminal 
underworld, the thugs and extortionists who played a prime role in feeding the country’s repressed 
appetite for consumer goods. “Organized crime in the Soviet Union bears the stamp of the Soviet 
political system,” wrote Konstantin Simis, a lawyer who had worked in the Soviet Ministry of 
Justice, in his expose, USSR: The Corrupt Society. “It was characteristic of the system that the ruling 
district elite acted in the name of the Party as racketeers and extortionists, and that the criminal 
underworld per se paid through the nose to the district apparat for stolen goods and services.” 

Left out of this lucrative equation were most average Russians. Although the majority also learned 
to deal in illegal black market contraband to one degree or another — there was simply no other way 
to survive — the greedy nomenklatura, the elite membership of the Soviet governing system, and 
criminal demimonde hoarded the greater share of the nation’s already scarce resources for 
themselves. Victims of the raw fear that was a legacy of the terrors of the Stalin regime as well as of 
communism’s own ongoing murderous abuses, most of the “proletariat” literally despised the State. 
“Everyone in my neighborhood was bitter toward Lenin, Stalin, and later Khrushchev,” Elson 
remembered. 



In towns like Kishinev, this tremendous cynicism and distrust of authority went beyond simply an 
acceptance of criminality. Most people not only did business with mobsters on a daily basis, but held 
powerful criminals — as opposed to the loathed apparatchiks — in the highest regard. These criminals 
often enjoyed a reputation among the populace for their Robin Hood-like honesty; they even meted 
out justice in local tribunals called People’s Courts, where common folk, eschewing State authorities, 
flocked to solve their personal disputes. 

The People’s Courts, which existed in towns and communities throughout the country, were largely 
administered by a special breed of colorful lawbreaker called vor v zakonye — or “thieves-in-law” — 
a fraternal order of elite criminals that dates back to the time of the czars. They first arose during the 
reign of Peter the Great (1682-1725), incubated in the vast archipelago of Russia’s prison camps. 
There, hard-core felons banded together in tight networks that soon spread throughout the Gulags. 
Members were sworn to abide by a rigid code of behavior that included never working in a 
legitimate job, not paying taxes, refusing to fight in the army, and never, for any reason, cooperating 
with the police or State, unless it was to trick them. A giant eagle with razor-sharp talons emblazoned 
on their chests announced their status as vors; tattoos on their kneecaps meant they would not bow to 
anyone. They even developed a secret language that proved to be virtually indecipherable to 
authorities, and set up a communal criminal fund, or obshchak, to bribe officials, finance business 
ventures, and help inmates and their families. 

The vor brotherhood grew in strength to the point that they began to play an unusual role in the 
nation’s history. They taught Lenin’s gangs to rob banks to fund the communist revolution. Later, 
enemies of the new State used them to sow dissension, fear, and chaos. During the Second World War, 
Stalin devised a plot to a nni hilate the thriving vor subculture by recruiting them to defend the 
motherland. Those who fought with the Red Army, defying the age-old prohibition of helping the 
State, were rewarded by being arrested after the war and thrown into the same prison camps with the 
vors who had refused to join the epic conflict. The “collaborators” were branded suki, or bitches. At 
night, when the Arctic concentration camps grew miserably cold, knives were unsheathed, and the 
two sides hacked each other to pieces; barracks were bombed and set on fire. 

The “Vor Wars,” or “Bitches’ Wars,” lasted from 1945 to 1953. When they were over, only the 
vors who refused to battle the Nazis had survived. By then, they wielded ultimate authority in prison, 
even over wardens, importing liquor, narcotics, and women. They slept near open windows, away 
from the communal toilet, where, according to their beliefs, only homosexuals and weaklings were fit 
to reside. Vors became made men in Soviet prisons only after they were recommended by at least two 
other vors. Even today, this nearly mythic criminal cult is one of the most dynamic forces in the 
Russian underworld. 

Elson thrived among men like these. “I loved Kishinev,” Elson fondly recalls. “The big guys and 
the tough guys used to teach me to steal from childhood. They let me go with them on burglaries. I was 
so skinny and small, they used to send me through the windows, and I used to open the door for them. 
We used to compare ourselves to the wolves of the forest, because the wolves eat only the weak 
animals.” 

By the age of nine, Elson was a full-fledged member of a fierce street gang. “We used to go from 
neighborhood to neighborhood to fight. The only reason we did it was to show we were strong and 
weren’t afraid. When I was eleven, someone pulled a stiletto on me. I couldn’t refuse to fight, 
because if I refused, I would be a hated person.” His opponent made a swift, jutting move, slicing his 



blade through Elson’s chin and into his tongue. “It was painful and I wanted to cry, but the gang leader 
who ordered me to fight was looking at me. I didn’t cry.” 

Elson’s parents had little patience for their son’s criminal activities. “Oh, my parents beat the shit 
out of me,” he said. Elson’s father, Abraham, was a master tailor who fled Poland on the heels of the 
Nazi invasion. The Russians suspected that he was a German spy and exiled him to Siberia for the 
duration of the war. Elson’s mother had been previously married, but her first husband died in the 
war, and their two children perished of starvation. “My mother and father used to tell me: ‘Monya, 
don’t go with those bad guys, because this reflects on you. You will have a bad reputation.’ But in 
school, I wasn’t very good. I liked to fight. I liked to steal. The older guys would extort money from 
me, then I’d extort money from the younger kids. 

“But even as a child, I thought, ‘If I was born and raised in a different area, would I be the same, 
or different?’ But later, I understood that being a criminal was my destiny. I don’t know. I don’t 
believe in God.” 

Inevitably Elson began to have serious run-ins with Soviet law — a crucial step in becoming a full- 
fledged member of the underworld. If you didn’t break during a police beating, you were considered 
a stand-up guy. If you cracked, and became a snitch, you’d be labeled a musor, a Russian word that 
literally meant “garbage,” but that has taken on the pejorative meaning of either “cop” or “rat,” the 
worst epithet in the Russian criminal lexicon. “Before the detectives interrogated you, they’d try to 
beat a confession out of you,” Elson said. “They put dirt in special socks and beat your kidneys. 
Afterward, you urinate blood.” Elson insists that he never squealed. 

Before long, Elson graduated to one of the highest callings in the Eastern bloc’s criminal pecking 
order — a pickpocket. Skilled pickpockets received immense respect from other criminals, and were 
often accorded leadership status in their gangs. Polish Jewish thieves who came to Russia during 
World War II were considered the best pickpockets, Elson says. They could slip a wallet out of a 
jacket, snatch the rubles, and return it in a split second, the victim remaining unaware. 

Bent on proving his mettle, Elson moved to Moscow and joined a gang that specialized in 
extortion. “I don’t want to brag, but I was great at this,” Elson recounted. “I did it thousands of 
times.” If the victim balked, “I could talk nice, or put a gun to his ear.” Monya’s motto: “Don’t show 
pity or regret when you [kill someone]. Don’t even think about it.” 

Although by the time he was twenty-six, Elson was married, had two young daughters, and was 
flourishing in his gang life, political events conspired to create an even greater opportunity for him 
These were the early years of detente, and the American Jewish establishment and their congressional 
allies, who had long been trying to bring Soviet Jews westward, saw a way to leverage their cause. 
Leonid Brezhnev saw detente as a way to shore up an ailing economy. In September 1972, in a speech 
before the National Conference on Soviet Jewry, Washington State Democratic Senator Henry 
“Scoop” Jackson proposed linking U.S. trade benefits to emigration rights in the Soviet Union. He 
later co-sponsored the Jackson- Vanik Amendment, which withheld most- favored-nation status from 
socialist countries that restricted Jewish emigration. The effort, which was bitterly opposed by Nixon 
and Kissinger as a threat to detente, was one of the factors that pressured Russia to allow tens of 
thousands of Jews to leave the country. In the two-year period between 1972 and 1973 alone, more 
than 66,000 Russian Jews emigrated, compared to just 2,808 in 1969. 

But with what must have been considerable amusement, the Soviets made certain that this vast 
exodus was not made up solely of innocent, persecuted Jews. Much as Fidel Castro would do several 



years later during the Mariel boatlift, the KGB took this opportunity to empty its jails of thousands of 
hard-core criminals, dumping vast numbers of undesirables like Monya Elson on an unsuspecting 
America, as well as on Israel and other Western nations. 

Persecution certainly played no role in Elson’s application for Jewish refugee status. He was 
typical of his era — a deracinated Soviet Jew with a touch of self-loathing. “They called me a ‘fucking 
kike’ everywhere,” said Elson, and “if someone called me a Zhid, I fought back.” But otherwise, “I 
was thinking, What kind of Jew am I? I don’t know any Jewish holidays — I never heard of them But I 
sang Russian songs. I ate Russian food. I spoke Russian language. I sucked inside Russian culture.” 
The only thing he liked about being Jewish per se, he admits, was that some of the Soviet Union’s top 
crooks were also Jews. 

However, if stealing from the workers in the workers’ paradise was pure pleasure, Elson 
reasoned, then stealing from the workers in the vastly richer capitalist paradise would be nirvana. 
Fortunately, his Soviet passport was stamped “Jew,” and in 1977 he obtained a precious exit permit, 
and moved his family to a transit camp outside Vienna, run by the Jewish Agency. 

Elson was given an Israeli visa; it was the only way the Soviets would let a Jew leave the 
U.S.S.R. But like many Jewish refugees, he wanted to go to the United States instead, and well-funded 
American Jewish organizations who supported the concept of free immigration helped large numbers 
of them to gain entry to America, infuriating Israel’s Zionist establishment, which believed that Israel 
should be the destination for all the Jewish people. Soon, he was moved from Vienna to a transit 
camp near Rome operated by the Hebrew Immigration Aid Society for emigres headed to Western 
nations. It was in these camps, where criminals from the far reaches of the Soviet empire converged, 
languishing for up to months at a time, that the global menace of Russian organized crime was 
fomented. They proved to be both excellent recruiting stations and networking centers, where 
gangsters on their way to Brighton Beach met gangsters bound for Antwerp, Brussels, or London. 

Once the mobsters reached their destinations, they could phone up their new friends for criminal 
advice, intelligence, and additional contacts. Scattered around the world, Russian criminals passed 
on what they “learned about the local law enforcement system, the monetary system, how the banks 
work,” said a frustrated Drug Enforcement Agency official in New York. “And they just started 
beating the hell out of us. The Italians will come to New York, and that’s it. The most they can do is 
phone somebody back in Italy. But they don’t know anybody in London or Belgium.” 

“It’s the Red Octopus,” said Louis Cardenelli, a DEA supervisor in Manhattan. “We helped foster 
this global organized crime monster.” 

Elson waited in the Rome transit camp for three months. During his idle hours, he pickpocketed 
unwary Italians, using the plunder to buy designer blue jeans for his wife and daughters. Meanwhile, 
hoodlum comrades from Moscow who had already visited the United States paid calls on Elson to 
regale him with the criminal splendors of Brighton Beach. “When I asked Elson why he came to 
America,” one of his defense lawyers in Brooklyn bluntly acknowledged, “he said, ‘To shake people 
down.” 

When he arrived in New York in 1 978 on a flight paid for by the U.S. government, Elson was like 
a nine-year-old kid who had won a lifetime pass to Disneyland. “I was free!” he said. “I could rob! I 
could steal! I could do whatever I wanted!” 


In the 1970s, more than forty thousand Russian Jews settled in Brighton Beach, the formerly stolid 



working-class Jewish neighborhood that inspired Neil Simon’s gentle play Brighton Beach Memoirs. 
It was under the shadow of the elevated subway tracks on Brighton Beach Avenue, bustling with 
Russian meat markets, vegetable pushcarts, and bakeries, that the Russian gangsters resumed their 
careers as professional killers, thieves, and scoundrels. By the time ofElson’s arrival, Brighton 
Beach had already become the seat of the dreaded Organizatsiya, the Russian Jewish mob. 

Elson quickly discovered that Brighton Beach was two communities. Affluent Russians resided in 
the well-kept Art Deco apartment buildings that lined the Atlantic Ocean, while on the many side 
streets, littered with crack dens and decaying clapboard homes, poor Russian families lived 
sometimes ten to a squalid room. The neighborhood had decayed so badly that even the local 
McDonald’s had shut down. Bordered on one side by the ocean and on another by an enormous 
middle-class housing project referred to by the emigres as the “Great Wall of China,” the Russians 
built a closed world, inhospitable to outsiders, that was self-consciously modeled on the city many 
once called home — Odessa — a tawdry Black Sea port that was once considered the Marseilles of the 
Soviet Union. Beefy men in fur caps walked down the boardwalk on frigid winter mornings, ice 
caught in their beards and hair, stopping at vendors to buy pirogi, pastry shells filled with spicy pork, 
topped with a dollop of sour cream. Movie houses showed first-run Russian-language films; cafes 
crackled with the voices of gruff conversations in Russian and Ukrainian. 

The streets also crackled with gunfire. “Little Odessa” was the new Klondike, a town full of 
dangerous desperadoes, where the powerful crooks preyed upon the small. During this anarchic 
epoch of Russian organized crime in America, a “big man” gathered around him other strong men to 
form a gang. These groups were amoebalike; there was little loyalty, and entrepreneurial wiseguys 
constantly shifted allegiances in search of a score, vying with one another over Medicare and 
Medicaid scams, counterfeiting schemes, and drug deals. A professional hit cost as little as $2,000, 
and it was often cheaper to hire a hit man than it was to pay off a loan. 

The gangsters devoted most of their energy to preying on the community they helped to create. 
Nearly every Russian in Brighton Beach had a family member who was either connected to the mob 
or paying off an extortionist. 

Gang leaders would headquarter their operations in one of the multitude of Russian restaurants 
and cabarets. The most notorious one, on Brighton Beach Avenue in the heart of Brooklyn’s emigre 
community, was named, appropriately enough, the Odessa. It was owned by Marat Balagula, a 
bookish-looking hood, who bought it in 1980 and quickly turned it into mob central. He replaced the 
flaking paint and frayed industrial carpeting with chrome and parquet, and hired a stunning African- 
American singer fluent in Russian. Downstairs, he opened a seafood cafeteria. 

The Odessa attracted huge crowds of locals, who gorged themselves on inexpensive, family-style 
meals that included gluttonous portions of chopped liver, caviar, slabs of sable, beef Stroganoff, and 
skewers of lamb, all washed down with the bottle of Smirnoff vodka that was placed on each table. 
As a four-piece band that looked more Vegas than Moscow played Sinatra standards and Russian pop 
tunes, buxom bottle blondes in black leather miniskirts danced with barrel-chested men among the 
cabaret’s Art Deco columns. A corner of the room was sometimes reserved for members of 
Hadassah, a woman’s Zionist group, who came to express solidarity with the Russians. 

The club had odd brushes with celebrity. After an arch portrait of the Odessa appeared in The 
New Yorker s “Talk of the Town,” it briefly became a popular nightspot for thirty- something yuppies 
who wanted to savor beans in a Caucasian walnut sauce and the titillating aura of organized crime. 



And pop singer Taylor Dayne got her first break at the Odessa when she answered an ad in The 
Village Voice seeking musicians. Dayne, then a plump fifteen-year-old high school girl from Long 
Island, was friendly with Balagula, and her picture still hangs on the nightclub’s wall. When director 
Paul Mazursky wanted to film the cabaret scene in Moscow on the Hudson with Robin Williams in 
the Odessa, Balagula declined, afraid of drawing too much attention to the club. The scene was shot 
at the National restaurant, a rival Brighton Beach mob hangout then owned by Alexander 
“Cabbagehead” Skolnick, a Danny DeVito look-alike with a violent streak. 

Late at night, after the last diner left the Odessa, the American version of the People’s Court often 
convened upstairs in the disco. But unlike back in the Soviet Union, in Brighton Beach the tradition of 
influential criminals adjudicating local disputes “became corrupt,” explained a prominent Russian 
emigre. “There is never a time when the judges don’t take a piece of the action.” The judges were 
often Balagula and two of his thugs, who meted out sentences while seated around a table in the 
cabaret. The lights were dimmed, and no food or water was provided. “It is very, very dark, like a 
Godfather movie,” said an emigre who was summoned to several proceedings. “The first thing I said 
was ‘Why don’t you turn on the lights?’ Silence. Total silence.” 

It was just such a setting that greeted the small-time jewel thief Vyacheslav Lyubarsky, who was 
ordered to appear in “court” to settle a $40,000 gambling dispute. The judges quickly ruled against 
him, and when Lyubarsky balked, he was suspended, naked, from a light fixture. Then one of the 
judges, Emile Puzyretsky, whacked out on coke and vodka, threatened to disembowel him Puzyretsky, 
who had spent twelve years in the Soviet Gulag for murder and was decorated with Technicolor 
tattoos of a skeleton, bats, a snow leopard, and an angel, had become one of Little Odessa’s most 
feared enforcers. “He uses his knife on every occasion,” notes his FBI file. 

As a newcomer to Brighton Beach, Elson found himself in a strange and unfamiliar land, and he 
had to learn a different set of survival skills. “One thing that disappointed me about America is that 
people don’t carry money,” he said with a frown. “Everything is credit card.” He adapted in the 
manner he knew best: “I started working credit card scams, even though I didn’t know how to speak 
English.” 

Elson soon teamed up with forty-eight-year-old Yuri Brokhin, an intellectual of modest 
accomplishments who had immigrated to the United States with his wife in 1972. Since then he had 
managed to foster a reputation for himself as a prominent Russian Jewish dissident. He wrote two 
books, as well as articles for Dissent, Jewish Digest, and the New York Times Magazine, most of 
which were fierce anticommunist polemics. 

“I heard about Brokhin in Moscow,” Elson said. “He was well known. His nickname was 
‘Student.’ I used to call him ‘Brain.’” 

Together, the pair embarked on a lucrative crime spree, stealing hundreds of thousands of dollars’ 
worth of jewelry, often using a simple, no-risk scam. Corruption in Manhattan’s diamond district on 
47th Street was so rampant at the time that the authorities had all but given up policing it. All Brokhin 
and Elson had to do was to identify crooked store-owners, visit their shops, and demand the goods. 
“We tried to rob thieves,” Elson says. They knew that their “victims” were so deep into their own 
crimes that they’d never call the police, but would simply pass the losses on to their insurance 
companies. Soon, storeowners throughout the diamond district were seeking out the Russian robbers 
to stage fake burglaries so that they, too, could scam their insurers. 

The duo employed a different gambit to rob honest jewelers. They’d dress up as ultra- Orthodox 



Jews, replete with paste-on beards, side curls, long black coats, and black hats. Entering a jewelry 
store run by an Orthodox Jew, they would ask to see a variety of expensive diamond stones from the 
display case. Brokhin would babble away in Yiddish, distracting the salesman, while Elson switched 
the diamonds with zirconium They’d continue to haggle, and after failing to make a deal, would slip 
away with the jewels tucked snugly inside the pockets of their coats. The con is called the “fast- 
finger.” “We made a lot of money with that,” Elson boasts. 

Once, after pulling the scam on a trip to Chicago, the two men were arrested in their Orthodox 
Jewish attire as they boarded a plane at Midway Airport. It happened to be Yom Kippur, the holiest 
day of the Jewish calendar, when observant Jews are strictly forbidden to travel. An airport security 
guard who was Jewish became suspicious, thinking the men looked more like Cuban terrorists than 
rabbis. Pictures of them in Hasidic garb appeared the next day in Chicago newspapers. Brokhin’s 
wife rushed to Chicago with $175,000 in cash for bail; somehow, they both got off without a jail 
sentence. Their records were also expunged. “It’s a lot of money to get off the hook” and beat a felony 
rap, said Elson enigmatically. 

Although they were pulling in good money, it was still a small-time operation and Elson was 
burning with ambition. He increasingly turned to vicious acts of drug-influenced extortion to make a 
name for himself. Failing to move up the criminal food chain, he decided to join the most powerful 
gang in Brighton Beach, headed by the rapacious Evsei Agron. Elson, however, was disappointed in 
his new boss’s management style. “Agron wanted to be the sun, but he didn’t want the sun’s rays to 
fall on somebody else,” Elson grumbled. “I wanted to kill him. But you see, it was not so easy.” 

The tempestuous gangster from Kishinev realized that his future — if he had one at all — showed 
little promise in the Darwinian world of Brighton Beach. Frustrated, Elson trekked to the jungles of 
South America in 1984 to set up a cocaine smuggling operation. “I went to Peru, I went to Bolivia, I 
passed through a lot of South America,” Elson recounted. Although he didn’t yet speak Spanish, he 
ventured deep into the tropical rain forest to purchase cocaine. “I wasn’t interested in one key, two 
keys, three keys. I was making huge deals,” crowed Elson, who operated out of Europe and Israel. 
Still, the criminal big time eluded him and he was incarcerated in Israel for trafficking in cocaine. 

Years later, however, Elson would return to Brighton Beach with a vengeance, creating one of the 
most powerful Russian mob families in the world, while initiating a gangland war that left a trail of 
bodies from the street corners of New York to the back alleys of Moscow. 



2 


HU LITTLE DON 


The man who deprived Monya Elson of his warm spot, seemed, at first glance, too unprepossessing 
a figure to become Brighton Beach’s first don. A short, grandfatherly man, Evsei Agron attracted little 
attention as he passed through Immigration at Kennedy Airport on October 8, 1975. He was one of the 
5,200 Soviet Jewish emigres to enter the United States that year, many of them gangsters sent from 
Russia by the KGB. He had listed his occupation as “jeweler,” and perhaps he had even once been 
one. But he had also served seven years for murder in a Soviet prison camp, from which he emerged 
as a vor. After leaving Russia in 1971, he ran a large prostitution and gambling ring in Hamburg, West 
Germany. And even though he had supposedly been cast out of the vor brotherhood for welshing on a 
gambling debt, the order’s ferocious reputation gave him sufficient cachet to quickly seize power 
when he arrived in Brighton Beach. Little else is known about Agron’s early years. His records from 
the Soviet Union were sealed, and few of his victims from the Old Country who are still alive are 
willing to share their reminiscences. 

From a modest office at the El Caribe Country Club, a catering hall and restaurant, the Leningrad- 
born Agron ran a vicious extortion ring that terrorized the Russian emigre community. “They were 
scared shitless of him,” FBI agent William Moschella has recalled. By 1980, his gang was bringing in 
tens of thousands of dollars a week. Agron’s victims ran the gamut from Russian doctors and lawyers 
to shopkeepers and grocery store owners on Brighton Beach Avenue. “What if they refused to pay?” 
chuckled a gang member in mock amusement. “We’d beat them in their store right in front of 
everybody. But they paid. They knew what was coming if they didn’t pay. They knew they’d get 
murdered, if they don’t pay.” 

Agron once threatened to kill a Russian emigre’s daughter on her wedding day if he didn’t pay 
$15,000. Going to the police would have simply guaranteed a late-night visit from one of Agron’s 
henchmen, like the Nayfeld brothers, or the forty-five-year-old Technicolor killer Emile Puzyretsky. 
“Puzyretsky had a great contempt for life. He killed his enemies with force, fury, and no mercy,” a 
Russian Militia colonel recalled. 

One of the most terrifying sounds in Brighton Beach was Puzyretsky’s voice on the other end of the 
phone. “You have to pay!” Puzyretsky screamed at a recalcitrant shakedown victim in one tape- 
recorded conversation. “Otherwise you’re not going to live! And if you survive, you’re not going to 
be able to work anymore!” 

“Willy, please don’t terrorize me anymore,” pleaded the distraught Russian emigre, who was 
being ordered to hand over $50,000. “We aren’t livin’ in a jungle. We live inU.S.A.” 

“You fuckin’ rat. . . I’ll make you a heart attack. This is the last time you’ll be able to see. If you 


don’t give the money. . . just wait and see what’s goin’ to happen to you.” 

Puzyretsky was paid — with interest. 

The Nayfeld brothers were just as savage. The steroid-enhanced thugs emigrated from Gomel, 
Russia, in the early 1970s. The black-bearded Benjamin, a former member of the Soviet Olympic 
weightlifting team, was a bear of a man with a twenty-two-inch neck. He once killed a Jewish youth 
in a Brighton Beach parking lot in front of dozens of witnesses by picking him up like a ragdoll with 
one hand and plunging a knife into his heart with the other. The teenager had allegedly insulted 
Benjamin’s girlfriend and reached for a weapon. After the murder, eighteen witnesses vouched for 
Benjamin’s version of events, insisting the stabbing was a justifiable homicide, and the case was 
dropped. 

By all accounts, Boris Nayfeld was even more fearsome than his brother. To this day, superstitious 
Russian emigres insist that his eyes are sheer white orbs, a sign that he has no soul and is possessed 
by the devil. 

Olga, the owner of two hair salons in Manhattan’s Greenwich Village, recalls the day in the mid- 
1 980s when Boris and Agron swaggered into her brother’s Brooklyn restaurant and ordered him to 
sell his one-third stake at a rock-bottom price. “The restaurant was not doing well,” she says. “He 
wanted to sell, but at a fair price.” When he refused, “Boris clubbed my brother over the head with 
his gun.” 

Olga and her family lived in the same Brighton Beach apartment complex as Nayfeld and his non- 
Jewishwife. “Boris’s kids were always playing with my kids inmyhouse,” said Olga, still enraged 
over the decade-old incident. One night, she tailed Boris’s Mercedes. At an intersection, she hit her 
brights, and flew out of the car to pick a fight: “How dare you, you shit! To do this in the house where 
you live, you bastard!” 

“We’re only trying to help your brother,” replied an unfazed Nayfeld, who with Agron stole the 
restaurant anyway. 

Resistance like Olga’s was rare. For the most part, the community endured the horrible violence 
inflicted on them by a large and growing criminal class. They had left a brutal society where the state 
and the government were as crooked as the crooks. Their blatant distrust of authority carried over to 
the United States. The American government, which had generously given them refuge and financial 
assistance, was still the enemy. There was a great tolerance for white-collar crime. The new emigres 
routinely cheated on their taxes, stole food stamps and welfare benefits, and shopped in sable coats 
while their late-model Mercedes were parked in the mall. Medicare, Medicaid, and other forms of 
insurance scams were ubiquitous. Stealing from the government was as much a part of their culture as 
was paying off the mob. Their own xenophobia was one of their greatest enemies. It allowed the 
mobsters in their midst to act with impunity. 

However viciously cruel his subordinates, it was Agron who was despised above all in Brighton 
Beach. His own brand of cruelty involved carrying around an electric cattle prod, with which he 
enjoyed personally torturing his victims. Unlike some Russian vors, Agron held fear above honor. “If 
Agron had been an honorable godfather, he wouldn’t have had to use brute force to extort 
shopkeepers,” says Ivan, a former resident of Brighton Beach and a Gulag vet. “Instead, he would 
have been showered with gifts, both as a sign of homage and as payment for protection from ruthless 
street predators like Monya Elson. The owners of the stores would have said, ‘Oh, please take from 



The widespread antipathy toward Agron finally found its release one night in 1980. While 
strolling down the Coney Island boardwalk, Agron was shot in the stomach and lost part of his lower 
intestine. 

“We hired a retired cop to stand guard over him at Coney Island Hospital,” recalled a Genovese 
wiseguy who had begun a close alliance with Agron. “I have a friend in police intelligence. He went 
to talk to Evsei, who had tubes in his nose and arms.” 

“Do you know who shot you?” asked the detective. 

“Yes,” Agron nodded. 

The detective reached into his suit and took out a ballpoint pen and pad. “Who? WeTl take care of 
it,” he said soothingly. 

Wagging his finger, Agron rasped, “I’ll take care of it myself.” 

There was no shortage of theories about who shot Agron: Perhaps it was connected to Agron’s 
local gambling debts, said the smart money on the Brighton Beach boardwalk. Perhaps the hit was 
contracted by someone Agron had chiseled in Germany, the Genovese source surmised. Perhaps a 
member of his own gang thought it was time to replace the imperious don, shopkeepers along 
Brighton Beach Avenue prayed. 

Agron shrugged off the attempt on his life. He remained supremely self-confident. His boys were 
making major scores in everything from truck hijackings to Medicare fraud. He even purchased a 
Russian-language newspaper in Brighton Beach so the burgeoning emigre community could read all 
the news that was fit to print according to the little don. 

The paper was torched. 

Still, Agron retained an iron grip over the most powerful Russian crime group in Brighton Beach, 
with outposts in at least a half dozen North American cities. Agron’s criminal authority was bolstered 
by two highly potent allies: the Genovese crime family and Ronald Greenwald, a politically savvy, 
well-connected Orthodox Jewish rabbi. These connections, Agron concluded, made him invincible. 
More than that, without Greenwald’s careful nurturing of Agron’s criminal career, and the Italian 
Mafia’s muscle, the Russian mob in America might never have been anything more than a minor 
annoyance, a two-bit gang of emigre hoodlums. 

The nexus between the Russian mob and the Italians was a man named Murray Wilson, whose 
consummate money laundering skills had earned him a reputation at the FBI as a modern-day Meyer 
Lansky. Wilson, a Genovese associate, engineered some of the Russian mob’s first big criminal 
scores, and eventually he would help a second generation of Russian racketeers become a financially 
sophisticated global peril. 

Wilson was raised in a bare-knuckles neighborhood in the Bronx, where Jewish gangs like 
Murder Inc. once roamed. He preferred hanging out with street corner wiseguys to pursuing a “legit” 
career, like his able cousin, Marvin Josephson, the founder of International Creative Management, the 
largest theatrical and literary talent agency in the world. Barely managing to eke out a diploma from 
Taft High School, Wilson nonetheless effortlessly mastered the intricacies of offshore accounts, 
letters of credit, and complicated international stock market transactions. In the process, Wilson, who 
has an import-export firm and is a restaurateur, became the focus of at least eight criminal probes. 

Wilson’s patron in the Genovese family was underboss Venero “Benny Eggs” Mangano. Benny 
Eggs began his career as a soldier with Lucky Luciano and rose to oversee the Genovese family’s 
multibillion-dollar-a-year racketeering enterprise. He once boasted over an FBI wire that he 



surrounded himself with Jewish associates as fronts to help generate and hide illicit funds because 
they were shrewder at such financial dealings than the Italians. According to Benny Eggs, when a Jew 
had an annual income of two or three million dollars he would declare a healthy $300,000 of it on his 
taxes, enough to avoid raising any suspicions with federal authorities. An Italian wiseguy, on the other 
hand, might declare only ten grand. It was the IRS, he warned, that had nailed A1 Capone. 

Fortunately for La Cosa Nostra, Wilson, a pugnacious, right-wing Jewish militant who was active 
in resettling Russian Jewish emigres in Brooklyn, quickly deduced that many of the new arrivals were 
not long-suffering, downtrodden Jewish dissidents, but professional thieves and hit men — a potential 
bonanza for the Genovese crime family. The Italians were not only getting the services of highly 
skilled Russian crews, but were extending their control to a new neighborhood. They already had 
affiliations, for example, with the Greek mob in Queens and the coke-pushing Dominican gangs in 
Washington Heights. 

Wilson introduced Agron to the Genovese chieftains, forming the nucleus of the dark alliance. “A 
day didn’t go by when a truck hijacking or a jewelry heist didn’t go down,” a Genovese goodfella 
who committed many street crimes with the Russians admitted. “It was a time of high adrenaline.” 
Although Agron was very much the junior partner, enamored of the Italians for their well-entrenched 
national power base, their vast army of soldiers and political connections, the Genovese bosses 
valued Agron’s crew for its tireless work ethic, ruthlessness, and most especially, its global 
connections. 

Nevertheless, there were major cultural differences between the ethnic crime groups that 
sometimes caused friction: with a few exceptions, the Italian gangsters lived quiet lives in modest 
houses, trying not to call attention to themselves. On the other hand, “the Russians have a tremendous 
zest for life and like to live large,” says James DiPietro, a criminal attorney in Brooklyn who has 
represented both Russian and Italian underworld figures. “They keep saying we are Russians and we 
are proud of being Russians. Russians are the best! One Halloween at Rasputin” — a Russian mob 
haunt in Brooklyn — “they came in Ronald Reagan masks, in limos; they love to flaunt their affluence.” 

And unlike the Russians, the Italian mobsters more or less adhere to established rules of conduct. 
“The Italians don’t kill civilians — not even the family members of rats. The Russians have no such 
codes,” says DiPietro. 

Rabbi Ronald Greenwald did as much for Agron’s career as did the Italian gangsters, and then 
helped groom a new generation of Russian wiseguys to enter corrupt Third World countries and loot 
their natural resources, a charge the rabbi denies. But well-placed sources say that some of the little 
don’s biggest scams were hatched in the rabbi’s downtown Manhattan commodities firm. Greenwald 
says he first met Agron in West Berlin while he was innocently sitting in a hotel lobby wearing a 
yarmulke. The rabbi says Agron started a conversation with him about Judaism. He claims he didn’t 
know that Agron was a vicious extortionist who tortured victims with a cattle prod and ran an 
infamous prostitution and gambling empire. Greenwald allegedly helped Agron get a U.S. visa, 
according to several former business associates of both men. The rabbi denies that he helped Agron 
enter the United States, but admits that the mobster would sometimes visit his Manhattan office. In fact 
his office was a magnet for a host of Russian and Italian gangsters, as well as a powerful U.S. 
congressman and a convicted KGB spy. 

Greenwald was born on the Lower East Side in 1934. “I was the only kid in school who played 



hardball without a glove,” Greenwald told me. “That’s how tough I am!” He went to Jewish day 
schools and then to rabbinical college in Cleveland. Though he is an ordained Orthodox rabbi, he 
never took the pulpit. “I felt I should be out in the work world.” 

At one time or another Greenwald has been a bank director, president of a small business college, 
gas station owner, chaplain for the New York state police, a liaison between a segment of New 
York’s Orthodox Jewish community and the state Republican party — and a high-risk entrepreneur 
with ties to the Genovese crime family and the Russian mob. 

But it was as a political operative for Richard Nixon that Greenwald first made a name for 
himself. The then-president had received 17 percent of the Jewish vote in 1968, and he wanted to 
double it in 1972. New York, with its huge Jewish population, was a crucial state. And Greenwald, 
as one 1971 New York Times story put it, was “key to [Nixon’s] New York effort.” 

Greenwald was recruited by CREEP — the Committee to Reelect the President — to mine for 
Orthodox Jewish votes. He toured synagogues, warning that McGovern would betray Israel and wipe 
away Jewish gains by giving away too much to blacks. His efforts paid off: Nixon received nearly 36 
percent of the Jewish vote in 1972. 

The rabbi was repeatedly in the throes of some political scandal or other. After Nixon was 
reelected, for example, he was rewarded with a plum post at the Department of Health, Education, 
and Welfare as a consultant on Jewish poverty programs, including a job-training program for 
Brooklyn’s Hasidic community. Greenwald was soon being investigated by a young federal 
prosecutor named Rudolph Giuliani for allegedly placing jobs program trainees in a garage in 
Williamsburg of which he was part-owner, as well as for creating no-show jobs. (The investigation 
was dropped, and Greenwald has denied wrongdoing.) 

A few years later, he was in front of Giuliani again, this time pleading for Marc Rich and Pinky 
Green — the billionaire fugitive financiers and commodities brokers who fled the United States in 
1983 one step ahead of a sixty- five-count federal indictment for fraud and income tax evasion. 
Greenwald, who was their business representative in the United States, tried to cut a deal that would 
bring them home to face civil, but not criminal, charges. Hasidic community leader Rabbi Bernard 
Weinberger, who along with a group of Orthodox rabbis sat in on the meetings, said that Greenwald 
told Giuliani that the fugitives were great humanitarians because they gave vast sums of money to 
Jewish charities. Giuliani was unmoved. 

Thanks to his friendships with Greenwald and the Italians, Agron was soon participating in 
schemes that dwarfed the type of street crime that had been the Russians’ mainstay. In 1983, federal 
agents investigating a Mafia skim of the casino at the Dunes Hotel in Las Vegas stumbled onto a 
multimillion-dollar fraud perpetuated jointly by Agron and Wilson and planned with Greenwald in 
Greenwald’s office. (“Ridiculous,” Greenwald says.) The Dunes was owned by Morris Shenker, 
Jimmy Ho ffa’s attorney and a longtime target of FBI probes. During the 1950s and 1960s, Shenker, 
himself a Russian-born Jew, had invested hundreds of millions of dollars of the Teamsters union 
Central States Pension Fund, which he and Hoffa controlled, into the Dunes and other famous Las 
Vegas hotels, giving the Mafia a hidden share of the gambling Mecca. According to the FBI, some of 
that money was being siphoned off in the scam set up by Wilson and the others. He arranged for 
Agron and a dozen members of his crew to fly into Las Vegas on all-expense-paid junkets. The 
gangsters were each given lines of credit of up to $50,000, but instead of gambling the money, they 



simply turned their chips over to Wilson. The chips were later cashed in; the markers never repaid. In 
this way, over a period of several months, the Russians helped defraud the Dunes of more than $1 
million. The government believed that Shenker had masterminded the scheme. He eventually 
plundered the Dunes into Chapter 1 1 . Indicted for personal bankruptcy fraud in 1989, Shenker died 
before the government could mount its case. When Russian-speaking FBI agents traveled to Brighton 
Beach to question the erstwhile junketeers, “the Russians wouldn’t talk to us,” said the agent who ran 
the investigation. “They said, ‘What can you do to us after the KGB and the Gulag?’ The only thing 
they were afraid of is that we would deport them, and we won’t do that.” - 

By the mid- 1980s not only had Agron achieved a certain measure of criminal notoriety and power, 
but he was also beginning to add more sophisticated schemes to his criminal repertoire, a 
development that did not go unnoticed among the Italian Mafia’s bosses. The Italians were 
particularly impressed with the Russians’ growing adeptness at bilking financial markets, which was 
aided by members of a younger generation of Russians who were now returning from graduate 
schools with MBAs and getting jobs on Wall Street. Gambino crime family head Paul Castellano, for 
instance, was overheard on an FBI wire praising a Russian fraud that involved manipulating the stock 
in Boj angles, a fast food chain. 

But as potent a force as Agron had become, he was still prey to the cutthroat struggles for 
dominance that continued among the lawless Russian gangs, and on a cold evening in January 1984, 
as he walked up a gentle slope from the garage in the basement of his home on 100 Ocean Parkway in 
Brooklyn, Agron was shot again — this time, twice in the face and neck at point-blank range. The don 
was rushed for a second time to Coney Island Hospital. Though Dr. Larissa Blinkin was unable to 
remove the slugs, she did save his life, but not without leaving the mobster’s face paralyzed on one 
side, twisted in a permanent sneer. Once again, when the police asked him if he knew the assailant, he 
said he’d take care of it himself. 

As he had during the earlier attack, Agron believed he knew who had authorized the hit. He had 
recently been feuding with an upstart Russian gang led by Boris Goldberg, an Israeli army veteran 
from the U.S.S.R., and Ukrainian-born David “Napoleon” Shuster, a criminal mastermind who was 
reputedly the best pickpocket in Brighton Beach. The Goldberg gang maintained a formidable arsenal 
in a safe house on West 23rd Street in Manhattan’s Chelsea neighborhood. The armory included an 
assortment of pistols and silencers, and cartons of hand grenades and plastic explosives, as well as 
numerous remote control detonators. 

Goldberg owned a kiddy-ride company off Kings Highway in Brooklyn called Rainbow 
Amusements. As a cover to score narcotics, “he used to do a lot of travel to the Far East to look at 
new rides,” says Joel Campanella, a former New York City cop who is now a U.S. Customs official. 
The gang sold coke out of its Chelsea stronghold to midlevel street dealers, and, according to police 
statements made by a gang member, to film stars and the managers of rock bands. 

It was also the scene of nonstop drug and sex orgies. Goldberg, a bland-looking man with black- 
framed, coke-bottle glasses, had a growing cocaine dependency that made him so paranoid that once, 
after hearing a siren, he flushed two kilos of coke down the toilet, then pulled a sweaty wad of cash 
from his pocket and ordered an underling to run out and procure two more kilos so he could continue 
his sybaritic party. 

When Goldberg wasn’t holed up in his hideout, he was often cuddling with his girlfriend Tonia 
Biggs, the daughter of Penthouse publisher Bob Guccione. Biggs was an editor of Forum, an adult 


magazine also published by her father. “She lived in Beverly Hills [and] was about thirty years old, 
blond, big chest, but a little sagging,” Goldberg gang member Charlie Rivera, a razor-thin man who is 
half Sicilian on his mother’s side, told law enforcement agents. “She also had a penthouse [in New 
York], and he sold coke out of both places. Boris would bring coke out from New York and he would 
sell some out there.” Biggs later conceded that she let Goldberg use her home for coke parties, but 
she denied helping him peddle it. 

Meanwhile, the Goldberg gang, hopped up on drugs, insanely violent and indiscriminate, was 
responsible for a staggering string of robberies, shootings, insurance frauds, auto thefts, and narcotics 
sales. They hurled grenades at the storefronts of recalcitrant extortion victims in California, and 
performed contract murders as far away as Texas. They assassinated competing drug dealers, the wife 
of a gang member suspected of cheating on him, and an elderly man, who was chased across a busy 
boulevard in Queens and shot twice in the head for refusing to vacate his rent- stabilized apartment. 

On another occasion, gang members were paid to kill two teenagers who had robbed and beaten a 
man with a hammer known on Brooklyn streets as Jacmo. Jacmo, who owned an antique Mercedes- 
Benz dealership, was also a major drug dealer with a long rap sheet. Jacmo dispensed the contract at 
Coney Island Hospital. A day later, one of the teens was lured from his apartment to meet a “friend” 
who was supposedly waiting downstairs in a parked car. When he peered inside the window, he was 
shot in the face with a. 38 caliber revolver loaded with copper-jacketed bullets. 

It was inevitable that, given their shared interests in the spoils of Brighton Beach, Goldberg and 
Agron would run afoul of each other. One issue that proved to be a constant source of friction was the 
collection of extortion money from Brighton Beach businesses. Sit-downs to discuss their turf 
disputes had never been able to resolve the problems. Once, the Nayfeld brothers even broke 
Shuster’s nose. Goldberg finally became so frustrated that he put out a standing $25,000 contract on 
Agron’ s head. 

In May 1984, Agron commanded Goldberg to attend a meeting at the El Caribe Country Club. 
Goldberg, his lieutenant Rivera, and several other gang members showed up to find fifty taciturn, 
heavily armed Russians waiting for them around a large oak table. Agron demanded to know if 
Goldberg was responsible for having had him shot. In the dim room, Agron’s face seemed to dissolve 
into the shadows, but there was enough light to see that he was cradling a shotgun as he sat in a white 
wicker chair across from Rivera. The diminutive don leaned forward and spat, “Why you shoot me in 
the fucking face?” 

Goldberg and Rivera were silent, each waiting for the other to respond. “We didn’t do it,” Rivera 
said finally, although he was, in fact, the one who had disfigured Agron in the botched hit ordered by 
Goldberg. 

Although Agron had not seen the shooter’s face, he had caught a glimpse of the man’s boots as he 
lay crumpled on the ground. 

“Let me see your fuckin’ boots,” Agron growled. 

“I don’t own a pair,” Rivera replied, his eyes darting to his feet. 

Eying him suspiciously, Agron looked around the room and then demanded that Goldberg’s crew 
all put their feet up on the table. He intended to inspect each of their footwear. 

When nobody moved, he shouted, “What’s da matter? You don’t want to?” 

One by one, Goldberg’s men raised their feet onto the table. The don was enraged: he didn’t 
recognize anyone’s shoes. 



Goldberg settled back in his chair uneasily. Speaking in Russian, he swore he was innocent. But if 
Agron wanted trouble, he warned, he had brought sufficient firepower. Agron sent a scout outside, 
who returned and reported that the parking lot was swarming with gunmen. It was a Mexican standoff. 

Goldberg convinced Agron that he was not involved in the attempt on his life, and the meeting 
ended without bloodshed. But if Goldberg was the most likely suspect in the attempt on Agron’s life, 
he was hardly the only rival who wanted the don dead. 

On May 4, 1985, Agron’s brawny chauffeur Boris Nayfeld was sitting outside his boss’s 
apartment building in a black Lincoln Town Car, waiting to make the weekly drive across the East 
River into Manhattan. Every Saturday morning, Agron went to the Russian and Turkish Baths on 
Manhattan’s old Lower East Side. The ornate nineteenth-century bathhouse had been a favorite 
hangout of Meyer Lansky, Bugsy Siegel, and Lucky Luciano during Prohibition, when the 
establishment kept a special cubbyhole behind the towel counter where the gangsters could deposit 
their tommy guns. It was a perfect place for Agron to have sit-downs with his pals, all of them 
sweating in the heat of the 200-degree steam room while burly attendants struck their backs with 
bundles of oak branches. 

On that morning, the fifiy-three-year-old Agron was still upstairs in his sixth-floor apartment, 
shaving in his lavish bathroom. Its imported marble and gold-leaf fixtures — a recently completed 
renovation that had cost $ 1 50,000 — were elegant even by Russian mob standards. Agron patted his 
disfigured face with expensive cologne, slipped on his baggy, blue pin-striped suit, and grabbed his 
brown fedora. While most Russian mobsters swaggered around in sharkskin suits and enough gold 
jewelry to stand out like lighthouses on a moonless night, Agron’s associates joked that he dressed 
more like a longtime resident of a senior citizens’ home. Just before he left, he told his common-law 
wife, a striking blond cabaret singer, that he would meet her for dinner that night at a Brighton Beach 
restaurant. 

At exactly 8:35 a.m. Agron pressed the elevator button outside his apartment door. Suddenly, a 
man wearing a jogging suit and sunglasses stepped from behind a corner in the hallway and shot him 
at point-blank range, hitting him twice in the right temple. He fell to the floor, blood pooling around 
him on the black and white marble tiles. 



3 


BRIGHTON BEACH GOODFELLAS 


A few days after Agron was found in a pool of his own blood, his driver, Boris Nayfeld, strolled 
into what had been Agron’ s modest office at the El Caribe Country Club in Brighton Beach. He was 
there to begin his new job as the driver and bodyguard of the man who benefited the most from the 
execution of Evsei Agron: Marat Balagula, the new godfather of the Russian mob. 

Virtually everyone in law enforcement who has had anything to do with investigating the Russian 
mob believes Balagula ordered the hit, but he has always denied it. “Evsei used to come to the 
Odessa [restaurant] and pick fights,” Balagula claims. “Sometimes ten or twenty people would get 
into a brawl. Maybe Evsei was killed by someone he fought with before.” 

Balagula had been serving as Agron’s consigliere for several years, and while he was always 
care fill to pay Agron the respect due a “great man,” he had his own ideas. All along, he had been 
forging a rival criminal syndicate of his own, and as Balagula’s star began to rise, explains a former 
insider, Agron “wanted a piece of the action. Because of his status, Agron expected something.” What 
Agron got, of course, was two bullets in the head. 

Within a few months of seizing power, Balagula demonstrated that he was the very model of a 
modern don. Unlike Agron, who had been a thuggish neighborhood extortionist, Balagula was a 
brilliant, coldly efficient crime boss who was soon not only conspicuously enjoying the lushest 
version of the American dream but bestowing his largesse on members of the small Russian emigre 
community. 

“Marat was the king of Brighton Beach,” recalled a former employee. “He had a Robin Hood 
complex. People would come over from Russia and he’d give them jobs. He liked professional men. 
Guys came over and couldn’t practice medicine or use their engineering degrees. He sought them out. 
He was fascinated with intellectuals. He co-opted them He put them into the gasoline business, he put 
them into car washes or taxi companies. He’d reinvest his own money in their business if they were 
having trouble. He had a heart.” Such generosity was, of course, also good for building loyalty. It 
seemed that everyone in Brighton Beach owed him a favor, and he wasn’t hesitant about collecting on 
them. 

Though Brighton Beach residents had good reason to be tight-lipped about Balagula, tales of his 
enormous wealth began circulating in cafes and over dinner tables: he tried to purchase an island off 
the coast of South Africa to set up a bank for money laundering; he circled Manhattan on luxury 
yachts, holding all-night drug and sex orgies; he rode in a custom stretch limo, white and immaculate, 
with a black-liveried chauffeur and stocked with ice-cold bottles of vodka. “Marat throws around 
diamonds the way we throw around dollar bills,” Joe Galizia, a soldier in the Genovese family, 


enviously told an associate in a conversation taped by police. 

“Everybody in Brighton Beach talked about Balagula in hushed tones,” says Ray Jermyn, former 
chief of the Rackets Bureau for the Suffok County DA in New York. “These were people who knew 
him from the Old Country. They were really, genuinely scared of this guy.” 

Marat Balagula was born in 1943 in Orenburg, a small Russian town, at the height of World War 
II. His mother, Zinaida, fled with the children from their home in Odessa as the German Wehrmacht 
swept across the Russian steppes. Marat’s father, Jakov, was a lieutenant in the Red Army; Balagula 
claims that he was with one of the armored corps that stormed Berlin during the last desperate hours 
of the war. 

In the harshness of the Stalin era, the Balagulas led a comfortable, middle-class life. Jakov 
worked in a factory manufacturing locks, as did his wife. Young Marat, an average high school 
student, was drafted into the Soviet army at the age of nineteen and served as a bursar for three years, 
after which the party assigned him to manage a small food co-op in Odessa. Determined to get ahead, 
Marat attended night school, receiving a diploma as a teacher of mathematics and then a business 
degree in economics and mathematics. Like many ambitious Russians with a capitalist predilection, 
he promptly plunged into the country’s flourishing black market. He quickly learned to attend to the 
demanding appetites of the apparatchiks, making certain the choicest meats and produce was diverted 
to them 

He was only twenty- two years old when he was rewarded with a prestigious job as a bursar on 
the Ivan Frankel, a Soviet cruise ship that catered to foreign tourists. According to American law 
enforcement sources and Brighton Beach colleagues, party bosses slipped Balagula currency, gold, 
valuable Russian artifacts, and stolen artwork to sell to the tourists or to fence in Europe. “It was a 
good job,” Balagula recalls. “I got good money. My salary was in dollars and rubles. I traveled to 
Australia, France, England, and Italy. The KGB gave me visas, no problem I brought back lots of 
stuff: stereos, cameras. I was not middle-class. I was upper-middle-class. I had a nice apartment in 
Odessa, a dacha on the Black Sea.” 

He met his wife, Alexandra, at a friend’s wedding party in 1965 and married her the following 
year. Because she didn’t like his traveling, in 1971, after five years at sea, he got himself appointed 
manager of the largest food co-op in the Ukraine, a huge promotion that allowed him to rise to even 
greater heights as a black marketeer. On his thirtieth birthday, the flourishing Balagula threw himself a 
gala party at his dacha in the sunny Crimea. Many of the region’s elite were in attendance — including 
Mikhail Gorbachev, then a young regional party boss, who posed for a photo with Marat and his wife. 
Balagula later bragged to his Brighton Beach mob associates that Gorbachev was on his pad, a claim 
that seems doubtful: even then, Gorbachev was a stern reformer. It would have been impossible, 
however, for a Soviet party boss to avoid dealing with black marketeers in some way, since they 
played such an integral role in the economic life of the country. 

The fact that Balagula was Jewish apparently never hindered his career, even though government- 
sponsored anti-Semitism surged after Israel’s victory over five Arab armies in the June 1967 Six Day 
War. “I never felt anti-Semitism,” Balagula says, though he admits he was only nominally a Jew: he 
never attended Odessa’s lone synagogue and was ignorant of Jewish history and religion. “Jews had 
some of the best positions in the country. They were the big artists, musicians — they had big money.” 

When he decided to journey to America, therefore, it was not because he suffered as a Jew, though 



he concedes, “I used that as an excuse when I applied for my visa.” Although he was leading the 
charmed life of a high-flying black marketeer, he decided to leave it behind when “I saw with my own 
eyes how people lived in the West,” says Balagula. “This pushed me to move.” A business associate 
explains: “Marat said he read about capitalism and knew he could do well over here.” 

On January 13, 1977, Balagula, his wife, and their two young daughters, together with his elderly 
parents and younger brother, Leon, moved to Washington Heights in upper Manhattan, where a small 
enclave of German Jews who had fled from Hitler lived precariously among drug dealers and boom- 
box din. Balagula attended English classes arranged by a Manhattan-based organization that settles 
Soviet Jews, which then found him a job in the garment district. He worked for six months as a textile 
cutter for $3.50 an hour, claims Alexandra, his wife. “It was hard for us, with no language, no 
money,” she says. 

Balagula’s fortunes improved markedly when he relocated his family to Brighton Beach and he 
started to work for the infamous vor Evsei Agron. “Everybody knew his name,” Alexandra cheerfully 
recalled. “He was so much in the [Russian] newspapers.” 

Agron, it turned out, was no match for the ambitious Balagula. While Agron’s technical expertise 
didn’t go beyond seeking sadistic new uses for his electric cattle prod, Balagula wanted to lead the 
Organizatsiya into the upscale world of white-collar crime, and with the experience he had gained in 
the Soviet Union, he developed a business acumen that put him in a class by himself. Surrounded by a 
cadre of Russian economists and math prodigies at the Odessa restaurant, he acquired a knowledge of 
global markets that enabled him to make millions in the arcane world of commodities trading. He also 
energetically cultivated the Italian mobsters he met as Agron’s consigliere. After Agron was 
executed, Balagula organized his followers in a hierarchy, much like the Italian Mafia, and before 
long, he succeeded in transforming the Organizatsiya into a multibillion-dollar-a-year criminal 
enterprise that stretched across the tatters of communist Eastern Europe, Africa, and Southeast Asia. 
Ultimately, however, it was Balagula’s spectacular success in the gasoline bootlegging business — a 
scheme that would reportedly earn him hundreds of millions of dollars and an honored position with 
the Italian Mafia — that would usher in the first Golden Age of Russian organized crime in America. 

Balagula’s bootlegging career began modestly enough. Within just a year after arriving in New 
York, he managed to gain control over fourteen gas stations. He then formed two fuel dealerships, and 
bought gas from a corporation owned by the Nayfeld brothers. This transaction was the foundation for 
an ingenious way to avoid paying billions of dollars of gasoline taxes. 

Gasoline bootleggers, mostly Turkish and Greek immigrants, had been operating in New York 
since the early 1960s. They simply collected taxes at the pump and instead of turning the money over 
to the government, pocketed the cash and disappeared before the IRS caught on. “They’d make their 
$600,000 and go back and buy an island and you’d never hear Rom them again,” says Sam Racer, a 
Russian-born attorney who has represented Balagula. “It was a nice scam until it got into the hands of 
the Russians. They bought Rollses and Ferraris and walked around Atlantic City with stacks of 
hundred-dollar bills, and suddenly the IRS realized they were getting fucked for hundreds of millions 
of dollars.” 

What the Russians had discovered was a way to expand the scam into the biggest tax heist in U.S. 
history. Prior to 1982, thousands of individual gas stations in New York State were responsible for 
collecting state and federal taxes — amounting to as much as 28 cents a gallon — and then passing them 



onto the relevant authorities. Because of rampant cheating, however, state lawmakers decided that 
year to shift the responsibility to New York’s four hundred gasoline distributors, who had to assess 
the fuel before it was moved to the stations. But clever Russians like Balagula found in fact that the 
new tax law presented opportunities for even larger scores. They would first set up a welter of phony 
distributorships. One of these companies would then purchase a large shipment of gasoline and, on 
paper at least, move it to another distributor through a so-called daisy chain. The transactions were 
carried out quickly and generated a blizzard of paper. One of the dummy enterprises was designated 
as the “burn company,” the one that was required to pay the taxes to the IRS. Instead, the burn 
company sold the gas at cut-rate prices to independent retailers with a phony invoice stamped “All 
taxes paid.” The bootleggers pocketed the money, and the burn company — no more than a post office 
box and a corporate principal, usually a Russian emigre living in a rooming house on Brighton Beach 
Avenue — disappeared. By the time the IRS came looking for the taxes due, the revenue agents were 
buried under an intricate paper trail that led nowhere. 

Balagula proved a master at this scheme, and he, along with many other Russian groups, began 
amassing enormous sums from it. Through their control of gasoline distributorships in the New York 
metropolitan area and elsewhere, the Russian mobsters evaded as much as $8 billion a year in state 
and federal taxes by 1985. 

Balagula’s fraudulent fuel syndicate received a major boost from the involvement of Power Test, a 
midsize, $160-million-a-year gasoline company on Long Island that was itself being driven into 
bankruptcy by independent stations selling cheap or bootleg gas. (Indeed, by 1980 half of all 
unbranded gas sold on Long Island was bootlegged, destroying the livelihood of many honest 
businessmen who couldn’t afford to compete against cut-rate prices.) Rather than see his company 
fail, Power Test CEO Leo Liebowitz decided to join the bootleggers. According to court testimony 
and interviews, he instructed two Power Test executives, John Byrne, a district sales manager and 
former New York City police sergeant, and Robert Eisenberg, the company’s in-house counsel, to buy 
bootleg gas. Byrne and Eisenberg then set up bootlegging companies with Balagula that would sell 
“cheap” gas exclusively to Power Test. 

The plan worked — so successfully, in fact, that Power Test soon had enough cash to begin 
negotiating with Texaco to purchase Getty Oil, one of the fabled Seven Sisters. (Because of antitrust 
problems, Texaco was being forced to sell the East Coast marketing operation of Getty, which it had 
acquired in 1984.) According to a Power Test insider, Liebowitz had joined the bootleggers not 
merely to save his company but also because of his aspirations to become a major player in the oil 
business. “Leo started talking to Texaco in the winter of 1983,” recalls the insider. “If he was going 
into receivership, he couldn’t talk to Texaco. He had to keep the company solvent. So he did deals 
with gasoline bootleggers. He did lots of those deals.” 

In 1985, Power Test concluded the deal for Getty, and Liebowitz — triumphant atop the $1.3 
billion company that adopted the lustrous Getty name — was lauded in Forbes as one of the most 
brilliant businessmen in America. “The sky’s the limit,” Liebowitz told Newsday. “We are the largest 
independent in the United States and we are just getting started!” 

Six years later Getty became the first major oil corporation in recent history to be convicted of 
gasoline bootlegging. John Byrne and Robert Eisenberg escaped prosecution by becoming 
government witnesses. Two senior company executives were convicted and sentenced to jail terms, 
and Getty was fined $400,000. Liebowitz, to the surprise of many, was never indicted. Getty’s role in 



the scheme was uncovered by the Long Island Motor Fuel Task Force, a group of federal, state, and 
local prosecutors and investigators formed to combat gasoline bootlegging. “Gasoline excise tax 
evasion is no longer a local problem. It’s a national problem,” said James Rodio, a tax attorney with 
the U.S. Justice Department and a member of the task force. “Cheating of this magnitude has to stop,” 
U.S. District Court Judge Leonard Wexler chided during sentencing. 

By this time, however, the money from bootlegging had spread far beyond the gasoline industry. It 
was being used, New York and federal officials feared, to corrupt politicians, labor unions, and law 
enforcement itself. Consider the revelations of Lawrence Iorizzo, a six-foot, 450-pound, self- 
confessed bigamist who became a government informant after he was indicted for stealing $1.1 
million in gas taxes in 1984. A New York gasoline company executive who is credited with inventing 
the daisy chain, Iorizzo ran an enormously successful bootlegging empire in the early to mid-1980s 
with the help of Michael Franzese, the vicious “Yuppie Don” of the Colombo crime family and a 
consortium of Russian and Eastern European gangsters. In sworn testimony before the oversight 
subcommittee of the House Ways and Means Committee, Iorizzo charged that one of his former 
partners, Martin Carey, had skimmed millions of dollars of tax money from his Long Island gas 
stations and illegally channeled it into the campaign treasury of his older brother, Hugh, then the 
governor of New York. Martin Carey escaped prosecution because he had been granted immunity by 
testifying in another case. 

Incredibly, Iorizzo’s charges of political corruption were never investigated. In 1987, when 
Jeremiah McKenna, the counsel to New York’s Crime and Correction Committee, called for a hearing 
to probe Iorizzo’s allegations, he was forced to resign by New York governor Mario Cuomo, who had 
been Carey’s running mate as lieutenant governor in 1978. Cuomo complained that McKenna, a 
respected Republican investigator, was spreading false and malicious stories. Iorizzo had previously 
testified to Congress that he had made political contributions to Governor Cuomo ’s 1984 campaign 
from some of these bootleg funds, asserting that he had done so at the “directions of people above 

99 * 

me. - 

Though Iorizzo’s allegations about political corruption were ignored by prosecutors, his court 
testimony did help break up the powerful Russian- Italian bootlegging combine led by Franzese, which 
paved the way for Balagula to gain uncontested control of the operation. By 1985, Balagula was well 
on his way to becoming the undisputed king of American bootleggers: his domain was a self- 
contained, vertically integrated behemoth that included oceangoing tankers, seven terminals, a fleet of 
gasoline trucks, truck stops (including even their greasy spoon diners), and more than one hundred gas 
stations, all operated by fiercely loyal Soviet Jewish emigres. Balagula even negotiated to take over 
oil-refming terminals in Eastern bloc countries, which would process fuel waste products known as 
derivatives, then sell shiploads of the toxic by-products in North America. Balagula’s headquarters in 
New Rochelle, New York — which ironically stood next to an FBI building — looked like a scene in 
a Stanley Kubrick black comedy. Russian secretaries wearing identical zebra-print dresses and fur 
hats worked at computer terminals while video cameras scanned the office. “The obsession with 
security,” says one of Balagula’s associates, “came from the paranoid Russian personality that one 
develops growing up in a police state.” 

Flush with cash, Balagula began to run his empire like a profligate oil sheik. Joe Ezra, a former 
attorney for Balagula, once accompanied the Russian godfather and his retinue on an epicurean 
“business trip” to Europe, to broker oil deals with Marc Rich, the billionaire fugitive commodities 


trader. The group paid visits to Cartier shops in every airport along the way, spending thousands of 
dollars on “shit like little leather-bound address books that cost $300 each,” Ezra remembered. Often, 
they would stop in a city and take over entire whorehouses and go on food binges. “They’d go to 
meals in Germany with ten people, and when they finished, somebody would say, ‘I’m still hungry,’ 
and [Marat] would order a second meal for everybody.” Most of the food would be thrown away. “If 
a bill was $1,500, the tip would be $1,500. If a guy would come over and sing a song, Marat would 
give him a hundred-dollar bill. I remember saying to myself, “These people need intensive 
psychiatric help.’” 

Balagula was also a compulsive gambler, and the joke in Brighton Beach was that you would 
know how he did at the craps tables over the weekend by the price of gas at the pump on Monday. 
“Marat says he’s got a photographic memory, but he don’t,” grumbled a powerful Genovese crime 
family figure who went to Atlantic City with Balagula after the Russian boasted that he could count 
cards. “We lost $20,000. 1 told Marat, ‘How the fuck do you remember anything?”’ 

Befitting his new status, Balagula bought a $1.2 million home on Long Island, to which he 
relocated his family from Brighton Beach. His reputation as Little Odessa’s godfather, however, was 
met with consternation by his new neighbors and caused his younger daughter a bit of grief in school. 
“I love my dad very much. My father’s my world to me,” Aksana, a sullen, curly haired, nineteen- 
year-old optometry student told me in a 1992 interview. “There was a lot of harassment, a lot of 
fights,” she recalled. Once, after a classmate called her father a gangster, “I just got very upset and I 
threw a book at his head. They [the school] made me see a psychologist.” 

As Balagula’s wealth grew, so did the violence in Brighton Beach. At least fifteen unsolved 
homicides were attributed to his turf wars with rival Russian mobsters. “Marat ordered many 
murders. I know!” insisted an Italian mob boss. Many of the gangland- style slayings were brazen, 
broad-daylight shootings carried out in Brighton Beach restaurants in front of numerous witnesses. 
“These guys are worse than the [Italian] wiseguys,” says Ray Jermyn. “They have no hesitation at all 
to whack somebody. They are cowboys.” 

Balagula may have employed enough wild, Uzi-wielding Russians to reign supreme in Brighton 
Beach, but he didn’t dare fight with the Italians. When a Mafia associate told John Gotti in 1986 about 
the Russian-dominated gasoline bootlegging scam, the “Dapper Don” was heard to reply over a 
government bug, “I gotta do it right now! Right now I gotta do it!” He wasn’t alone in coveting a share 
of this business: heads of four of the five New York Italian Mafia families imposed a 2-cents-per- 
gallon “family tax” on the Russian bootleggers, and the levy became their second largest source of 
revenue after drugs, worth an estimated $100 million a year. Genovese soldiers guarded the family’s 
take at Balagula’s terminals in Westchester, while Christopher “Christie Tick” Lurnari, then the sixty- 
eight-year-old underboss of the Lucchese crime family and one of the most powerful mobsters in the 
country, got Brooklyn, Queens, and Staten Island. 

Balagula’s closest aides had argued to keep the Italians out of the bootlegging operation. Marat 
had “capable guys,” said a key associate. “They weren’t afraid of fights.” But Balagula believed he 
could never win a war with the Italians, so he invited them in, confident he could outsmart them into 
accepting less than they had agreed upon. Marat “didn’t realize how insidious they were,” says the 
associate. “He fell for their charm. He had watched too many American movies. 

“The LCN didn’t want to know the ins and outs of the gas business,” but simply wanted their cut, 



the source asserts. “The LCN reminded Balagula of the apparatchiks in the Soviet Union. He thought 
as long as he gave them something they’d be valuable allies” with their political connections and 
muscle. “Then all of a sudden he was at risk of being killed if he couldn’t pay to the penny.” 

Whatever it cost him in lost revenue, Marat was grateful to have the Italians on his side. 

According to a mob source, their new relationship enabled him to forge a protective alliance with the 
Genovese and Lucchese families against the Colombo family’s Yuppie Don, Michael Franzese. One 
of Franzese’s crew, Frankie “the Bug” Sciortino, had been going around with a Gotti soldier “shaking 
down a bunch of Russian bootleggers,” says Jermyn. “They would just go into places in Brooklyn and 
make them pay $25,000 a clip for protection, or else they’d use a ball peen hammer on them. The 
Russians are scared to death of the Italians. They scored over half a million dollars by shaking these 
guys down.” 

At around the same time, Franzese himself “tried to hustle Marat,” says a well-placed Genovese 
underworld figure. “I showed up at a restaurant, and two of Franzese’s guys was sitting with Marat. I 
said, ‘Who are these guys?”’ 

“They are not with me,” Balagula said. 

“The next time I saw Michael [Franzese] and mentioned Marat, his face went white,” the 
Genovese gangster says with a laugh. “Christie Tick had put out the word that Marat was under his 
protection.” 

When in 1 986 the Brooklyn office of Balagula’s company Platenum Energy was riddled with Uzi 
submachine gunfire, killing one of Balagula’s bodyguards with eight shots in the chest and two in the 
head, it was the Italians who came to Balagula’s aid. According to law enforcement sources, the 
shooters were two Russians, Michael Vax and Vladimir Reznikov, who were disgruntled because 
Balagula had sold them invalid state gasoline distributorship licenses. (Balagula told me the shooting 
was an attempted robbery.) 

A short time after the Platenum Energy incident, Reznikov, an infamous Brighton Beach hit man, 
stuck a gun in Balagula’s face outside the Odessa restaurant and demanded $600,000 and a 
partnership in his bootlegging empire. Balagula was so frightened by the assault that he suffered a 
heart attack but refused to go to the hospital. Instead, he persuaded his doctors to set up a makeshift 
intensive care unit in the bedroom of his fortresslike mansion, whose sandstone spires bristled with 
gunmen. “When we went to Marat’s house, I remember seeing Marat in bed hooked up to all kinds of 
machines,” Anthony “Gas Pipe” Casso, a Lucchese mob boss turncoat, recalled. - 

On June 13, 1986, Reznikov was lured to the Odessa to parley with Balagula, who was actually in 
California convalescing. When Balagula didn’t appear, Reznikov strolled back across Brighton 
Beach Avenue and climbed into his new brown Nissan. Suddenly, Lucchese soldier Joe Testa 
emerged from behind a car and pumped six bullets from a .380 automatic handgun into Reznikov’s 
arm, leg, and hip. As the grievously wounded Russian grabbed for his own weapon, Testa fired a fatal 
shot to his head. “After that,” Casso said, “Marat did not have any more problems from any other 
Russians.” 

However greatly the Russians may have feared the Italian Mafia, they had little regard for 
American law enforcement, manipulating the FBI as easily as they had the apparats in the Soviet 
Union. “As soon as they knew they were in trouble and law enforcement was breathing down their 
necks,” says Ray Jermyn, “they ran to the counterintelligence guys [the FBI and CIA] and tried to sell 


what they considered to be secrets and stuff.” In the years before glasnost, the strategy often worked, 
for the FBI routinely placed advertisements in New York’s Russian-language newspapers, offering 
cash rewards for information about KGB spies. When a Russian gangster became an intelligence 
asset, the feds would often shelve pending investigations targeting him. “We never stopped doing stuff 
because we were requested to,” Jermyn says. “But a lot of times the agents would change their focus 
and slow down. . . . You put it on the back burner, and then it kind of goes away.” 

Jermyn pleaded with the FBI to lend him Russian-speaking agents to monitor the voluminous, 
court-authorized wiretaps of Russian bootleggers. “We were always asking for agents to give us 
assistance to do translations,” he recalls. “They wouldn’t help. They said they were too busy, they are 
working at the [Soviet] embassy” in New York. 

“Then I got a phone call from a woman who said she was a deputy counsel in the CIA. I thought 
somebody was pulling my leg. She gave a callback number, and, sure enough, she worked for the 
Central Intelligence Agency. She was trying to bring to our attention that there was this guy who was a 
driver for Marat who had been a Russian submarine captain. She said that he had performed many 
valuable services for the agency and that he was still cooperating. And that’s when the bureau really 
first started to make inquiries [about our investigation].” When the court-authorized wiretaps 
revealed that Balagula and his comrades were major players in the bootlegging business, the bureau 
suddenly “gave us an agent full-time who had a Russian background and who had counterintelligence 
training,” Jermyn explained. 

The intelligence community’s interest in Balagula was undoubtedly heightened by his many 
friendships with KGB spies, corrupt Third World despots, and international terrorists. Exploiting his 
connections within the Russian criminal diaspora, Balagula had begun forming criminal networks 
with outposts in Russia, Europe, and Asia. In a typical transaction that exploited this international 
reach, his henchmen would buy automatic weapons in Florida, move them up the East Coast to New 
York, and ship them to the U.S.S.R., where firearms of this sort were extremely difficult to come by. 

But these were relatively small ventures for Balagula. From Brighton Beach, he and his cronies 
virtually ran the small, diamond-rich West African nation of Sierra Leone, whose president, Joseph 
Momoh, allowed the Russian mobsters to set up a global smuggling and money laundering operation 
there. Diamonds smuggled out of Sierra Leone were transported to Thailand, where they were 
swapped for heroin, which was then distributed in Europe by Balagula’s close friend EfimLaskin, 
who had been deported by the United States as an undesirable in 1986, and who had been arrested for 
illegally importing weapons and explosives to the Red Brigades in Milan. - The Russians even 
brought Genovese crime family members to Sierra Leone, where, among other activities, they 
plundered diamond mines with the help of corrupt tribal chieftains. The Italian gangsters, who helped 
bankroll Momoh’s 1985 presidential campaign, became so prevalent in Freetown that when he was 
sworn in, a contingent of Genovese goodfellas stood proudly on the dais next to Balagula under a 
fierce tropical sun. 

Balagula’s main contact in Sierra Leone was Shabtai Kalmanovitch, a charming, tanned Russian- 
Israeli entrepreneur. The two hatched numerous deals together, including one to import gasoline to 
Sierra Leone, which was brokered through the Spanish office of Marc Rich by Rabbi Ronald 
Greenwald, and another to import whiskey; the pair even had a contract to print Sierra Leone’s paper 
currency at a plant in Great Britain. Kalmanovitch also handled President Momoh’s personal security. 
In 1986, his Israeli-trained palace guard crushed an attempted coup; according to one account, 


Kalmanovitch pulled Momoh out of his bed just before rebels sprayed it with machine gunfire. As a 
reward, Kalmanovitch was granted major fishing and mining concessions and was allowed to run the 
nation’s largest bus company. He was also an operative for Mossad, Israel’s intelligence agency. 
Kalmanovitch’ s Freetown office was a prized listening post in a city with a large, prosperous Afro- 
Lebanese Shi’ite Muslim community in close contact with Lebanon’s then warring Shi’ite militias. It 
was only later that Mossad discovered that Kalmanovitch was not as valuable an asset as it had 
supposed: in 1 988 he was arrested in Tel Aviv and charged with being a KGB spy. Yitzhak Rabin, 
then defense minister, said he was “almost certain” that the Soviets had passed on information 
obtained from Kalmanovitch to Syria and other Arab countries hostile to Israel. Wolf Blitzer, at the 
time a correspondent for the Jerusalem Post, reported speculation that sensitive material stolen by 
Israeli spy Jonathan Pollard was passed on to the KGB by Kalmanovitch. - 

It was the peripatetic Rabbi Greenwald who introduced Kalmanovitch and Balagula to 
moneymaking opportunities in Africa. In May 1980, the rabbi had been asked by Lucas Mangope, the 
president of Bophuthatswana, one of the so-called independent black homelands inside South Africa 
during apartheid, to be its economic adviser with the rank of ambassador in New York and 
Washington. 

“But because there is a strong black opinion here and a strong liberal opinion that the black 
homelands are just an extension of apartheid,” Greenwald said, “I told Mangope that there was only 
so much I could do for him in the U.S. and he would be more successful dealing with Israel. Israel is 
closer, Israel doesn’t have political restrictions with South Africa like America has. I suggested they 
hire Shab-tai,” who was a close friend and business associate. 

Within several years after being introduced to Mangope, Kalmanovitch was a millionaire. 

Through a newly formed company called Liat, he landed lucrative contracts to build a soccer stadium, 
and imported Israeli specialists to train the Bantustan’s police and security service. In February 1987, 
when rebel armies revolted and placed Mangope in the soccer stadium Kalmanovitch had built, the 
Russian took his considerable wealth and relocated to Sierra Leone, using Greenwald’s contacts in 
the government. 

Eventually, the Russian and Italian gangsters were to lose more than $3 million in deals with 
Kalmanovitch. The Russian mobsters became so furious with Kalmanovitch that they threatened to 
kill him, said the Genovese source, who mediated peace talks between Kalmanovitch and Balagula. 
“The Russian mobsters wanted their money,” he said. “Marat said, ‘Don’t kill him, you can attract 
more flies with honey than vinegar.” 

In order to pay back his business losses, Kalmanovitch entered into an intricate scheme with 
Russian and Italian gangsters to defraud Merrill Lynch, according to several of the participants. These 
sources say that the Russian mobsters bribed a Merrill Lynch employee to steal unused company 
checks worth more than $27 million by illegally accessing the company’s computer. The employee 
also stole valid signature stamps. The checks and stamps were then sent by courier to Kalmanovitch. 

According to Interpol reports and sources involved in the scheme, on April 27, 1987, 
Kalmanovitch, Greenwald, and an associate left Kalmanovitch’ s lavish home in Cannes and drove to 
Monte Carlo where the associate opened up a business account at Republic National Bank for a paper 
company called Clouns International. He then desposited a number of fraudulently endorsed checks 
worth some $2.7 million. When the checks cleared three days later, Greenwald and the associate 
returned to the bank, where Greenwald was given $400,000 in cash from the Merrill Lynch funds. 


Greenwald carried the money in a large black bag via Germany to Switzerland, where he allegedly 
turned the cash over to Balagula’s representatives in a Zurich hotel men’s room According to the 
scheme’s participants, Greenwald was paid $50,000, an allegation the rabbi flatly denies. 

On May 22 of that year, Scotland Yard arrested Kalmanovitch at the Sheraton Park Tower Hotel in 
London at 3:00 A.M. It found three rubber stamps used to endorse the checks in Kalmanovitch’ s 
room Earlier that day, Kalmanovitch had had lunch with Uri Lubrani, the head of Israeli intelligence 
in south Lebanon, according to a source who attended the meeting. 

While Kalmanovitch was being led away in handcuffs, Greenwald, who was also staying at the 
Sheraton, threw his bags together and, without paying his bill, caught a Concorde flight back to 
America, according to the FBI and an associate of Greenwald. Greenwald returned home just in time 
for the Friday night Sabbath meal. 

Kalmanovitch was extradited to America to stand trial on fraud charges. (The FBI questioned 
Greenwald three times, but didn’t arrest him.) Greenwald rounded up a select group of prominent 
Americans and Israelis to provide character references, including New York Republican 
congressman Benjamin Gilman, who wrote that “Mr. Kalmanovitch enjoys a wide reputation for his 
integrity and business acumen.” He obtained bail and flew to Israel, where he was immediately 
arrested for being a Soviet spy. 

In 1986, at the height of his power, Marat made a reckless error. Robert Fasano, a small-time 
hood who traveled around Brooklyn in an ostentatious white Excalibur, phoned Balagula with an 
interesting proposition. Fasano had obtained the numbers of two dozen Merrill Lynch credit cards 
with six- figure authorization codes. Fasano also had sheets of white plastic and a machine that could 
emboss the stolen numbers on dummy cards. All he needed to use the material was some cooperative 
merchants who would agree to accept the phony cards to charge merchandise. The merchants would 
get a cut, though the goods, of course, would never leave the stores. At a meeting with Fasano, 
Balagula agreed to introduce him to Russian merchants in New York and Philadelphia. He then 
instructed two of his henchmen to accompany Fasano to the stores. 

The scam worked as planned, and the men took in more than $750,000, stopping only long enough 
in their shopping spree to feast at Russian restaurants. But Fasano was arrested by the Secret Service 
not long afterward, and agreed to wear a wire in meetings with Balagula. In those discussions 
Balagula not only implicated himself in the “white plastic” fraud, but also commiserated with Fasano 
about their sexual problems; both men, it seems, had trouble achieving erections. Fasano had found a 
doctor in New York who prescribed a plastic hand pump for genital stimulation, and recommended it 
to Balagula. The prosecution later played the tape at Balagula’s trial in Philadelphia to prove the men 
had more than a casual relationship. 

“Go out and get a ten-pound bag of shit and try to put it in a five-pound bag and that’s Fasano,” 
said Joe Ezra, one of the five defense attorneys Balagula brought to Philadelphia at a cost of nearly 
$1 million. Lead attorney Barry Slot-nick, renowned for his successful defense of Ber nha rd Goetz, 
was dismissed on the first day of the trial by the judge because of a conflict of interest: his firm 
already represented one of Balagula’s co-defendants, Benjamin Nayfeld. Slotnick, who received a 
$125,000 fee, camped out at the Hershey Hotel, where he debriefed Balagula’s lawyers at the end of 
each session and advised them on their strategy for the following day. 

Nevertheless, Balagula was convicted of credit card fraud, and there is even now a great deal of 



rancor among Balagula’s defense team. Some charge that Slotnick’s backseat lawyering hurt the case; 
others claim that one defense lawyer received a large bribe to fix the trial. Marat himself believed 
that the money was being used to grease the system. After his conviction, Balagula was taken by 
Rabbi Greenwald to attorney Alan Dershowitz to discuss an appeal. Instead, Balagula asked the 
esteemed lawyer to bribe the appeals judge. An indignant Dershowitz refused. Just three days before 
his November 1986 sentencing, the mobster fled to Antwerp with his mistress, former model Natalia 
Shevchencko. 

Secret Service agent Harold Bibb admits he feared that Balagula “would turn rabbit” after the 
government rejected the crime boss’s offer to ferret out Soviet spies in Brighton Beach in return for 
setting aside his conviction. In addition to protecting the president and foreign dignitaries, the Secret 
Service investigates credit card fraud and counterfeiting. Ironically, Bibb, a born-again Christian 
from Tennessee, had once been assigned to the security detail protecting Israeli cabinet minister 
Moshe Dayan during U.S. fundraising trips on behalf of Soviet Jews in the early 1 970s. He had now 
been given the task of hunting down the most dangerous of those Soviet Jews, the godfather of the 
Russian mob. 

In February 1987, four months after Balagula left the country, Bibb tracked him down in 
Johannesburg, where he was living with his mistress and her daughter, who had enrolled at a local 
university. “You have to understand how to chase a fugitive,” Bibb explained in his spartan Secret 
Service office in Memphis. “You either find the hole that they’re living in, you find the people that 
they are talking to, or you find out how they are getting funded.” In this case, Bibb found Balagula by 
tracing his girlfriend’s credit card receipts. He also discovered that Balagula was receiving monthly 
deliveries of $50,000 in cash from his New York underlings. The money, stuffed in a worn black 
leather bag, was hand-delivered to Balagula’s Johannesburg apartment by Balagula’s driver, the ex- 
submarine commander. 

Bibb had intended to tail the driver to Balagula’s hideout. But the Secret Service was too cheap to 
pay for his plane ticket, the agent said. So he contacted the security officer at the American embassy 
in Pretoria, who in turn alerted the police, supplying them with photos of the driver and Balagula. 
However, Bibb suspects that the constable who was dispatched to make the arrest let Balagula go 
free when the Russian handed him the monthly payment. Again with his mistress in tow, Balagula next 
fled to Sierra Leone, where he bought Sierra Leonean and Paraguayan diplomatic passports for 
$ 20 , 000 . 

Over the next three years of Balagula’s exile, he jetted to thirty-six separate countries, including 
Switzerland, Paraguay, and Hong Kong, where he worked “in the jewelry business,” according to the 
Genovese family figure close to him. Bibb even heard that he was once spotted playing craps in 
Atlantic City. Finally, on February 27, 1989, an especially alert border guard at the Frankfurt airport 
recognized the Russian godfather from his picture on the “Red Notice,” the wanted poster distributed 
by Interpol. After being apprehended, Balagula claimed, “It’s very difficult to be a fugitive. I can’t 
see my family. In the last year I started to work in the open. I wanted to get caught.” 

Balagula’s close association with Efim Laskin earned him detention in a maximum security 
“terrorist jail” in Germany. (One of his cell mates was Mohammed Ali Hamadei, the Lebanese who 
hijacked TWA Flight 847, during which a Navy SEAL was brutally murdered.) The New York Times 
reported that, during his extradition hearing, rumors circulated about a large bribe that was to be paid 
to free the Brighton Beach mobster. The Times also noted that, according to informants cited in U.S. 



intelligence reports, Balagula may have had connections to Soviet intelligence — a charge Balagula 
denied in a sworn statement to the FBI. 

Meanwhile, in New York, Barry Slotnick met with U.S. Attorney Charles Rose, hoping to broker a 
deal that would keep Balagula out of an American jail. Balagula proposed setting up a company in 
Europe to entrap traders in stolen American technology. “Marat also tried to present himself as a 
secret agent to help track down KGB spies in Little Odessa and Eastern Europe,” says one of 
Balagula’s attorneys Sam Racer. “He claimed Little Odessa was teeming with KGB and that they 
were using the gas stations as a front.” 

In return for his cooperation, said Charles Rose, Balagula “obviously wanted the authority to 
travel, which was important to him. We had FBI agents who were familiar with foreign 
counterintelligence stuff talk to him. It was all very cloak-and-daggerish. The theory was that he 
would be so valuable to us that we would not want him to be in jail. . .. We never really paid much 
attention, and said we wanted to prosecute the guy.” 

In December 1989, federal marshals wearing flak jackets escorted Balagula aboard a C-5A 
military transport bound for New York, where he was placed in the tomblike Metropolitan 
Correctional Center to await sentencing for his four-year-old conviction on credit card fraud. “He 
called me fromMCC crying, ‘Why ami in solitary?’” recalls Sam Racer. According to Racer, a 
contact in the Bureau of Prisons told Slotnick that “a group of terrorists from Europe was in New 
York to break Balagula out.” 

His rescuers never appeared, however, and Balagula received an eight-year sentence for the 
credit card fraud. In November 1992, he was sentenced to an additional ten years for evading federal 
taxes on the sale of four million gallons of gasoline. “This was supposed to be a haven for you,” 
declared U.S. District Court Judge Leonard Wexler. “It turned out to be a hell for us.” 

Balagula was domiciled in Lewisburg federal penitentiary, situated on one thousand acres of 
rolling Pennsylvania farmland. The shady, tree-lined blacktop leading to the prison from the highway 
looks like the entrance to an elite country club. The maximum security prison, however, is a vast stone 
fortress, with thirty- foot-high walls and eight gun turrets bristling with automatic weapons. Balagula 
shared a dormitory room with thirty-six dope dealers, rapists, and murderers. He was one of only a 
handful of inmates at Lewisburg convicted of a white-collar crime, and he was also the only mob 
boss allegedly running “family” business from the facility. 

I had always heard Balagula described as a man of King Kong-like proportions. But when prison 
guards ushered him into a smoky ground- floor visiting room, dressed in an orange jumpsuit and bound 
in manacles and chains, he looked haggard. He sat down heavily, a thick chain wrapped snugly 
around his soft paunch, and lit a Marlboro with yellow- stained fingers. 

It was his twenty-fifth wedding anniversary, and Alexandra, his tall, elegant blond wife, was in 
another waiting room. She was in a foul mood. Prison authorities had just told her that Balagula had 
been receiving visits from his mistress, Natalia Shevchencko. “It was hell” when his wife found out, 
Balagula hissed. 

Balagula was spending his days working as a prison janitor, practicing his English, reading 
Russian detective novels and academic books on economics. “They claim I made $25 million dollars 
per day bootlegging. It’s crazy! I got nothing. What have I got? The government took my apartment in 
Manhattan, my house on Long Island, $300,000 in cash. They said, ‘If you don’t cooperate you’ll go 



to jail for twenty years.’ The prosecutors wrote a letter to the judge that I’m a Mafia big shot so they 
put me here. 

“They want me to tell them about the Mafia, about gasoline [bootlegging], about hits,” Balagula 
told me, glowering. “Forget it. All these charges are bullshit! All my life I like to help people. Just 
because a lot of people come to me for advice, everybody thinks I’m a boss. I came to America to 
find work, support myself, and create a future for my children.” 

Balagula, who is eligible for parole in March 2003, has not only refused to give the authorities 
any information about the Russian mob’s activities in America, but denies that he ever heard of such 
an enterprise. “There is no such thing as the Russian Mafiya. Two or three friends hang out together. 
That’s a Mafiya? ” 



4 


OPERATION RED DAISY 


One after another, a parade of stretch limousines pulled up in front of an unremarkable two-story 
building squatting on the corner of a blighted stretch of Coney Island Avenue. Out of each stepped a 
massive Russian in a tuxedo, more often than not accompanied by a slender blonde in a low-cut gold 
lame evening gown. As they entered the etched brown metal doors, they were ushered into another 
world, a world that resembled nothing so much as the set of a B movie made six thousand miles away. 

Black-and-brown imported Italian marble covered the floor of the foyer where a hand-painted 
mural of St. Petersburg’s skyline led arriving guests into a cavernous nightclub and to tables covered 
with rose-colored tablecloths laden with slabs of sable, skewers of beef, and ice-cold bottles of 
Stolys. As multicolored lasers crisscrossed the room, Joseph Kobzon, a renowned Russian pop star, 
crooned Top 40 tunes from the motherland and, for the honored guests that evening, Sinatra ballads. 

This was Rasputin, the Winter Palace of Brooklyn. 

Off to the side stood two barrel-chested men, beaming, almost giddy. For the Zilber brothers, 
Vladimir, thirty-two, and Alex, thirty- four, everything had led up to this June 1992 gala opening. They 
had arrived in Brooklyn as penniless Jewish refugees from Odessa thirteen years earlier. Their father 
was a foreman in a New Jersey pillow factory, their mother a seamstress there. The boys, however, 
had quickly realized that the honest, hardworking immigrant was a chump game; they had made more 
than their parents ever dreamed possible from gasoline bootlegging, money laundering, and casinos 
and aluminum factories in the former Soviet Union. The Zilber brothers — Vladimir as informal head 
of U.S. operations, Alex as their Russian liaison — had become dons in the Brighton Beach mob; this 
was their Russian cotillion. 

When the Zilbers took their place at the head table — where a row of dark-suited Italian- 
Americans, all members of the Genovese crime family, peered across nearly empty vodka bottles at 
an equal number of hard-faced Russians — it symbolized a new era in organized crime in America. 
The Russians had always loved films about the American Mafia and took great pains to emulate their 
predecessors’ sense of sartorial style. But on this night, the two groups had more in common than a 
taste for heavy gold chains and open collars. The Russians had finally become powerful enough to sit 
at the same table with the Italians. No longer semicomic Godfather pretenders, the Russians were 
now arguably just as ruthless and, by many accounts, considerably wealthier than their more long- 
established counterparts. 

The Italians were not entirely flattered by the gaudy imitation; they had warned their Russian 
colleagues against indulging in glitzy nightclubs that might attract the attention of the FBI and the 
media. (Indeed, in November 1994, the New York Times featured Rasputin in its Living Section.) Not 


long after Rasputin’s grand opening, investigators examined its books. The ledgers showed the 
restaurant had been renovated for $800,000, but according to one Genovese crime family figure, the 
men’s bathroom alone cost half a million dollars. In fact, more than $4 million had been spent on 
upgrading Rasputin. “No legit guy is gonna invest that kind of money in a restaurant,” said the 
Genovese source. “The Zilbers wanted a place to sit with a big cigar, and then fuck the broads that 
come in there. 

“The restaurant is gonna be their downfall.” 

The Genoveses had good reason to be concerned about the Zilber brothers’ ostentatious lifestyle. 
They had staked Vladimir Zilber ’s gasoline bootlegging operation in exchange for a percentage of the 
tens of millions of dollars he made evading state and federal excise taxes. But he had gotten reckless, 
shaking down a team of FBI/IRS undercover agents posing as gasoline distributors in Ewing 
Township, New Jersey, and then, in February 1992, allegedly ordering the torching of the undercover 
business when they refused to pay a “mob tax.” 

On November 20, 1992, Vladimir was summoned to a meeting in Manhattan with Genovese crime 
family figures, who accused him of jeopardizing the business. A huge man with a trip-wire 
personality, Zilber was not cowed. “If I go down, you go, too,” Zilber told the Italians. “I’m not going 
to prison.” 

“Zilber had big balls,” said the Genovese associate. “Unfortunately, he used them for brains.” 

Zilber’s sour-tempered performance only stoked the Italians’ fears. If he talked, he could 
implicate, among others, Daniel Pagano, a forty-two-year-old Genovese capo who not only got a 
penny out of every 27 cents in gasoline taxes that the Russians stole, but was also involved in the 
record industry, loan sharking, and gambling. (An additional penny went to Gambino capo Anthony 
“Fat Tony” Morelli, who delivered a weekly cut to Gambino boss John Gotti at the Bergin Hunt and 
Fish Social Club. The cash reeked of gasoline.) Pagano was mob royalty. His late father, Joseph, a 
convicted narcotics trafficker, had been fingered by Mafia snitch Joseph Valachi as a hit man for the 
Genovese crime family in the 1950s. 

After the acrimonious Manhattan discussions, Zilber was supposed to go to a sit-down with 
representatives of Pagano in Brooklyn, says a well-placed Russian mob source. According to the 
Genovese figure, however, on the day of the meeting, Zilber was actually heading to Brooklyn to 
work out the details of a new gasoline scam, which he was concealing from Pagano and Morelli. 
Whatever version was true, this much is known: although he often traveled with four Genovese 
bodyguards, Zilber was alone when he steered his father-in-law’s battered 1989 Ford Taurus south 
toward the FDR Drive off-ramp onto the Brooklyn Bridge during rush hour. As he approached the 
ramp, a car braked in front of him. Another car with four Russians pulled up alongside. A shotgun 
blast hit Zilber in the side of the head, blowing away his optic nerve and filling his brain with bullet 
fragments. If his window had been open, doctors say, Zilber would have been killed. 

After the shooting, Fat Tony Morelli materialized next to Zilber’s bed in Bellevue Hospital’s 
intensive care unit. Morelli whispered something to the wounded Russian, and Zilber subsequently 
refused to talk to the police, although sources say he had recognized the triggerman. Vladimir did rant 
to the staff that he had been the victim of a mob hit, although the police had initially told the doctors 
that he was the victim of road rage. His physician noted in his medical chart that Zilber was a 
“delusional, paranoid schizophrenic.” Knowing better, Alex Zilber surrounded his brother’s room 
with round-the-clock bodyguards. 



The police found the shooters’ car abandoned at South Street Seaport, a popular tourist attraction 
in lower Manhattan. Inside was the shotgun used to shoot Zilber, as well as a rifle, a baseball cap, 
and a hair band of the type that Russian gangsters fancy for their flamboyant ponytails. 

Shortly after the incident, the real reason for Zilber ’s hit became clear. Through informants in the 
New York Police Department, the Italian Mafia had learned that federal indictments were being 
prepared. Zilber would be a serious liability when they were issued. “He’s lucky his head wasn’t 
blown off,” said the Genovese figure. “Vladimir was a loose cannon. Shutting him up was an act of 
survival.” Indeed, the hit could not have taken place, Russian and Italian underworld sources, as well 
as federal authorities, agree, if Pagano and Morelli had not sanctioned it. “The shooters would need 
somebody’s permission on the Italian side to kill the primary goose that was laying the golden egg,” 
says a federal prosecutor. 

The attempt on Zilber ’s life prodded the authorities into action. On November 22, 1992, two days 
after the ambush on the FDR, an army of federal agents, under the code name Operation Red Daisy, 
fanned out across New York, New Jersey, Pennsylvania, and Florida, with more than two hundred 
search warrants, confiscating evidence and freezing assets of the alleged gasoline bootleggers. After 
years of neglect, law enforcement had finally begun to marshal its forces and pay serious attention to 
the Russian threat. Operation Red Daisy would be by far its most successful foray against the Russian 
mob to date. 

But in general, state and federal law enforcement agencies were loath to go after Russian 
mobsters, instead devoting their energies to bagging Italian wiseguys, a traditional route to promotion. 
And because the Russian mob was mostly Jewish, it was a political hot potato, especially in the New 
York area, where the vast majority of refugees were being resettled by Jewish welfare agencies. As 
for the New York City Police Department, it had almost no Russian-speaking cops, and even fewer 
reliable informants in the Russian emigre community. For years, the NYPD’s intelligence unit 
couldn’t find a single detective to monitor the Russian mob, because many cops were scared. “The 
Russians are just as crazy as the Jamaican drug gangs,” a Ukrainian- speaking detective, who declined 
to work the Russian beat, told me in 1992. “They won’t hesitate to go after a cop’s family.” 

The NYPD was apparently unaware of the existence of the Russian mob until December 7, 1 982, 
when detectives were summoned to a luxury apartment building on Manhattan’s East 49th Street, near 
the United Nations. There they found a middle-aged man sprawled across a bed on his back — his 
arms outstretched, feet dangling over the edge and touching the floor, his eyes wide open. At first 
glance, lead detective Barry Drubin, a gruff police veteran, believed the deceased was a heart attack 
victim. The body lay in peaceful repose. There were no signs of a forced entry or struggle, and the 
dead man was still carrying his wallet and wearing an expensive gold watch and a black leather 
jacket. When Drubin looked more closely, however, he noticed that the vessels in one eye had burst, 
filling it with a dollop of blood. Drubin gently raised the man’s head and saw that blood had 
coagulated in the back of the man’s hair. There was no blood on the bed. The victim had been shot 
once, execution- style, at close range above the right ear at the hairline with a .25 caliber handgun. 

“We traced the bullet hole from the back of the head to the entry wound,” Drubin says, “ft was a 
professional hit.” 

Drubin’ s men searched the three-room apartment, which was decorated with expensive artwork. 
Nothing appeared to be disturbed or missing and they turned up no shell casings or suspicious 



fingerprints. A large, open attache case in the living room was empty, save for a jeweler’s loupe, a 
magnifying lens used to examine gems. The briefcase was subsequently checked for trace elements of 
drugs, but the tests were negative. Inside a credenza in the den, the detectives found $50,000 wrapped 
in cellophane, tucked away next to a VCR and an extensive video porn collection. A small amount of 
recreational hash was nearby. 

The victim was soon identified as forty-nine-year-old Yuri Brokhin — the man with whom Monya 
Elson had first teamed up with when he arrived in Brighton Beach, and with whom he had enjoyed a 
great deal of success robbing and smuggling precious gems. But as Drubin soon discovered, Brokhin 
had been leading a paradoxical double life. Most of the world knew him as a prominent Russian 
Jewish dissident, author, and filmmaker, who had immigrated to the United States with his wife, 

Tanya, on November 16, 1972. He lived in an expensive apartment on Manhattan’s East Side, bought 
a small country home on Long Island, and frequently treated friends to dinner at Elaine’s, a famous 
hangout for the city’s literati, and evenings at jazz clubs in Greenwich Village. He also owned a black 
stretch limousine and a beat-up Mercedes-Benz that he spent thousands of dollars to refurbish. 

While Tanya took a job at Radio Liberty, earning $20,000 a year, Brokhin worked to maintain his 
reputation as a writer of import. He had published two books, which received mixed to poor reviews, 
including The Big Red Machine, an expose of corruption inside the Soviet sports establishment, 
which was published by Random House in 1978. 

Brokhin’s anti-Soviet diatribes soon brought him to the attention of New York Democratic senator 
Daniel Patrick Moynihan, then vice chairman of the Senate Intelligence Committee. Brokhin was 
introduced to Moynihan by his chief of staff on the Intelligence Committee, Eric Breindel, an avid 
cold warrior. Brokhin supplied the committee with information about alleged Soviet agents who had 
penetrated America posing as Jewish refugees. Although Moynihan has no memory of having met 
Brokhin, Brokhin and Breindel developed an enthusiastic friendship, according to David Luchins, the 
senator’s longtime liaison to the Orthodox Jewish community. 

When Brokhin was discovered murdered, Breindel leaked a story to the press that he had been 
killed by the KGB because he was at work on a devastating expose of the personal life of Yuri 
Andropov, the newly installed Soviet general secretary, and onetime KGB head. Breindel told 
Moynihan that Brokhin’s execution was reminiscent of the highly publicized assassination of a 
Bulgarian dissident and anti-Soviet writer in England, who was stabbed with the poisonous tip of an 
umbrella by communist agents and later succumbed to the lethal toxin. - “After he put a bee in 
Moynihan’s bonnet,” as Luchins recalls, Breindel encouraged the senator to publicly call on the FBI 
to probe whether the Russian emigre had been slain by a foreign intelligence agency. The bureau 
dutifully complied, assigning William Moschella, one of its counterintelligence agents, to help Drubin 
unravel Brokhin’s homicide. “Moschella was not one of their big brain trusts, I can tell you that,” 
observed Drubin dryly. The NYPD’s Peter Grinenko, a Ukrainian- and Russian-speaking cop, was 
transferred from an auto theft detail to work with Moschella. 

Brokhin’s body had been discovered at 4: 1 5 P.M. by his girlfriend, Tina Ragsdale, who called 
911 after returning home from her photo editor’s job. (Brokhin’s wife, Tanya, was found drowned in 
the bathtub in their apartment a year earlier. Brokhin had recently taken out a $ 1 50,000 insurance 
policy on her life. Police ruled the death an accident. He collected double indemnity.) Ragsdale, a 
waif of a girl from Little Rock, immediately aroused Drubin’s suspicion. “She was in her twenties 
and he was forty-nine,” recalled Drubin, a circumspect man with a careful memory. “You had to 


really wonder what’s wrong with this love-starved, overly romantic young woman. He wasn’t a 
particularly good-looking guy In fact, he was quite ugly He was hard and severe-looking. And she 
was relatively attractive.” 

“Yuri and I were interested in the same things: photography and art,” Ragsdale insisted when 
interviewed fifteen years after her boyfriend’s homicide. “That was our common meeting ground.” 

She had given Drubin precisely the same explanation, but he didn’t buy it. “We got bad vibes from 
Tina. We felt she was holding back. We found the cash, hashish by the television, and the pornography 
tapes, and we didn’t feel she was giving us information.” 

After hours of relentless grilling, a tearful Ragsdale finally surrendered what the police wanted: 
the names of Brokhin’s closest friends — people to whom she also had grown close and may have had 
reason to protect. Although Ragsdale had given him a long list of names, Drubin didn’t recognize any 
of them. “There was nobody to tell you who these people were like there would be with the Italians,” 
he explained. 

At this point in time, Russian crime was recognized by the authorities as a growing problem, but 
not an organized one, and Russian criminals, when they were caught in petty food stamp scams or 
even quite large Medicare frauds, were treated as isolated cases. However, the NYPD had become 
sufficiently concerned with the rise in Russian arrests to have recently authorized setting up a two- 
man intelligence unit under detective Joel Campanella to begin monitoring the phenomenon. Though 
he had only just begun his investigation, Campanella was at the time the closest thing to an expert on 
the subject, and when Drubin eventually turned to him for assistance, he helped confirm that 
Ragsdale’s list of names was a menacing collection of Russian underworld figures. 

Drubin hauled in dozens of these men for interrogation, all of whom were coarse, Gulag- hardened 
thugs whom Ragsdale knew from smoke-filled parties, high-stakes card games, and vodka-laced 
nights in Russian cabarets. One suspect sat across Drubin’s desk in the squad room, contemptuously 
chomping on a .22 caliber bullet. “He would remove the bullet from the shell and chew on it. I don’t 
know what kind of lead poisoning he has. And when I asked him if he had any more of those, he 
showed me a whole box of bullets. And my next question was the same question that you would have 
asked. Do you have a gun that goes with the bullets? The next thing on the desk is the gun.” 

Drubin quickly realized that the Russians held him in very low regard. “I had one suspect look me 
in the face and say, ‘I did time on the Arctic Circle. Do you think anything you’re going to do is going 
to bother me?”’ 

Even the godfather of the Brighton Beach mob at the time, Evsei Agron, was brought in for 
questioning after one informant claimed that it had been he who had killed Brokhin. Agron, however, 
had an alibi: he had been playing cards with his friends. “They all had alibis,” Drubin complained. 
Before Agron exited the station house, Drubin did manage to relieve him of his favorite, ever-present 
electric cattle prod. 

Although Drubin was having little success in identifying the killer, he and Campanella were 
unearthing a huge amount of information about the workings of the Russian mob, and Campanella 
quickly set up a database in his unit. One of Campanella’s most shocking discoveries was that many 
of his fellow cops in Brighton Beach were on the Organizatsiya’s payroll. Employed as bodyguards, 
bagmen, and chauffeurs for Russian godfathers, the dirty cops made $150 a night or more for special 
jobs. “Everyone knew, including Internal Affairs, that cops in cheap suits who looked like gangsters 
worked the door as bouncers and sat in the front tables at Russian mob joints,” said criminal defense 



attorney James DiPietro. In the late 1980s, Campanella wrote to Internal Affairs about the problem; 
his complaint was ignored. 

Unaddressed, the problem persisted. In the summer of 1994, New York State tax investigator 
Roger Berger, acting on a tip from an underworld source, likewise contacted Internal Affairs, telling 
them about police working at the Rasputin and Metropole nightclubs, as well as traffic cops 
participating in phony-car-accident scams with the Russians. Instead of investigating the complaint, 
however, IA tried to browbeat him into revealing his sources. “I said, ‘First of all, these cops are 
conduits of information between the precinct and the Russians,’” Berger recalls. “And that would be 
just perfect, to turn my informant over to you so he can get killed.’” 

“Russians [in Brighton Beach] still don’t trust the local cops because they see them work as 
bouncers at the local mobbed-up restaurants,” says Gregory Stasiuk, an investigator with the New 
York State Organized Crime Task Force. “The Task Force had me go out and do interviews with 
Russians rather than the NYPD. The Russian community thinks the cops are on the take. The 60th and 
61st precincts are very corrupt. We can’t even do surveillance because the local cops make us in our 
vans. Every move we make is reported to the Russian gangsters by the dirty cops.” 

Barry Drubin was also warned “to be careful about whom I talked to and what I said” — in 
Brighton Beach — “because a lot of cops were on the mob’s payroll. Detectives were working as 
bodyguards, they were making collections, they were doing a little strong-arm shit, and I said forget 
about this stuff here. I’m not going near this with a ten- foot pole. These cops weren’t going to lead me 
to the guys that shot Yuri Brokhin.” 

The Moynihan- inspired investigation by the Moschella and Grinenko team wasn’t much help in 
Brighton Beach either. Drubin considered them buffoons, and recalled one incident in which he 
crashed a bar mitzvah with them just to show their faces and apply a little pressure to the mobsters. 

“It was at the Sadko restaurant,” Drubin recalled, an infamous mob joint. “Grinenko and Moschella 
got shit- faced, and Peter [Grinenko] starts dancing with all the Russian women, even breaking in on 
the husbands.” The situation was only exacerbated by the deep animosity between Grinenko and 
Drubin, which stemmed from Grinenko ’s supposed anti-Semitism. Grinenko allegedly told Drubin 
that he believed Jews were “genetically inferior.” When Drubin countered that Grinenko was an anti- 
Semitic Cossack, the cops nearly came to blows. - 

Despite the numerous obstacles, Drubin and Campanella were making some progress, at least in 
uncovering the truth about Yuri Brokhin. Beneath the facade of a Soviet critic and intellectual lay a 
mobbed-up international drug dealer, jewel thief, and confidence man. Brokhin was constantly in 
debt, and the paltry income from his writing career, which could amount to no more than a few 
thousand dollars a year, certainly did not account for his rather affluent lifestyle, which included 
frequent trips to Atlantic City gaming tables and the Aqueduct Race Track. A compulsive gambler, he 
also spent many evenings playing cards with his friends in the Russian mob — godfathers, future 
godfathers, hit men, and extortionists, who gathered to gamble in a fortified Brooklyn “social club.” 
“He made a lot and he played a lot,” said Ivan, a Russian mobster whose friendship with Brokhin 
dated back to Moscow, where Brokhin specialized in robbing copulating couples in public parks. 
“Yuri was very close with the godfather Evsei Agron,” explained Ivan, who remembered how happy 
Brokhin was when Agron invited him to Canada to attend the godfather’s younger sister’s wedding. 

But there was an even more duplicitous side to Brokhin, Drubin later learned from federal 
counterintelligence agents. Brokhin and his criminal cronies took frequent trips to Bulgaria. Its spas 


were a favorite hangout for Brighton Beach gangsters, KGB agents, and Soviet black marketeers. The 
spas were cheap, conducive to conducting business, and within close proximity to the U.S.S.R. A 
great deal of contraband, such as narcotics, flowed in and out of the Soviet Union through Bulgaria, as 
did intelligence information. Sofia was also a principal money laundering center for the KGB and the 
Brighton Beach mob. Brokhin was frequently observed by U.S. intelligence agents slipping in and out 
of the Soviet Union from Bulgaria and then returning to New York. U.S. counterintelligence officials 
believed that he was not only trading in contraband, but supplying the KGB with information about his 
new homeland. If he was a Soviet mole, as these officials believed, he could easily use his status as a 
dissident intellectual and friend of the Senate Intelligence Committee to provide valuable information 
he may have gleaned through his relationship with Breindel. 

But Brokhin was killed, not because of Cold War intrigue, but because of a dispute among thieves. 
On the morning of Brokhin’ s homicide, he had had breakfast at the National restaurant in Brighton 
Beach with Ivan. Then the men drove into Manhattan, where Ivan dropped him off at his home. “Yuri 
did something wrong,” Ivan recalled. “Yuri told me that he was going to go and live in Europe. ‘I’m 
finished over here. Wednesday I’m going to get a lot of money, sell the apartment, and I’m going,’” 

Sometime that afternoon, two unidentified men entered Brokhin’s apartment. “He knew the people 
he let in,” Drubin said. “He did not know he was getting hit. Everything was laid out — the briefcase, 
the jeweler ’s loupe — like he was doing business. He was a burly guy, about five ten. He would have 
put up a struggle if he knew he was about to get it. And he laid down so nicely on the bed after he was 
killed, he hardly rumpled the bedcover.” 

Drubin, who had interviewed more than a hundred suspects, concluded that Brokhin had probably 
been killed in a jewelry scam gone wrong, and that Balagula’s old nemesis, Vladimir Reznikov, had 
been the triggerman. “Yuri was pulling some con on West 47th Street and maybe there were some 
diamonds involved,” Drubin suggested. “Brokhin owed some money and pissed somebody off and he 
was killed.” 

Incredibly, in the years between Brokhin’s homicide and the launch of Operation Red Daisy, law 
enforcement did little to stem the rising red tide of the Russian mob. Despite the efforts of individuals 
like Drubin and Campanella, and despite the glaring evidence that came to light in a few scattered 
prosecutions, such as that of Marat Balagula, there were still few authorities who understood, or even 
believed, that the Russian mob was a deadly threat. “Nobody takes the Russian mob seriously,” the 
soft-spoken Campanella said a few years after the Brokhin incident. “The lack of interest of law 
enforcement has given the Russians time to grow.” 

A large part of the problem was political: the Russian mob was predominantly Jewish. It was for 
that reason, asserted Campanella and other New York State and federal law enforcement officials, 
that seven years after Campanella’s two-man Russian mob unit in the NYPD was inaugurated, it was 
shut down in a highly politicized, characteristically New York City type of reaction. The effort had 
come under considerable criticism from the Jewish establishment, which complained that the adverse 
publicity generated in the hunt for Russian Jewish criminals would foster anti-Semitism and 
jeopardize the continued emigration of Russian Jews to Israel and the West. 

In Germany, where the arrival of the Brighton Beach mob was quickly recognized as a serious 
problem, police formed a task force of one hundred specially trained investigators in the early 1990s 
to combat the Russians, according to a classified report prepared by the German Federal Police in 



Wiesbaden. The Russian crime wave, which included bloody rubouts in fashionable restaurants on 
Berlin’s Fasanenstrasse, forced authorities to overcome their “supersensitivity. . . to the Jewish aspect 
of emigre crime,” said the report. But in the United States, according to several top law enforcement 
officials, Jewish organizations continued to lobby the Justice Department to downplay the threat 
posed by the Russian mob. “The Russian Mafia has the lowest priority on the criminal pecking 
order,” admitted FBI spokesman Joe Valiquette during a 1992 interview. 

Some of Valiquette’ s colleagues were harshly critical of the bureau’s lack of attention to the threat. 
They believed that the Organizatsiya had already developed into a new version of the Mafia; one that 
was just as ruthless as the Italian brand but potentially very much more difficult to tackle. “The Italian 
mobsters play boccie ball, the Russian gangsters play chess,” said one law enforcement source who 
marveled at their growing sophistication. And while the Russian mob may not have had the 
cumulative force of seventy years of tradition behind it, like La Cosa Nostra, by the early 1990s, 
some five thousand hard-core Russian criminals had already established themselves in the New York 
region, a criminal presence that was as large as all the Italian Mafia families combined. 

“The Russians are an emerging crime group,” Justice Department prosecutor Patrick J. Cotter, a 
member of the team that convicted John Gotti, said in 1992. “They make tons of money, they kill 
people, they are international, they are moving into drugs — but we don’t have a single unit of the FBI 
that’s devoted to going after them. We’ve got a Bonanno squad, we’ve got a Lucchese squad, but we 
don’t have a Russian squad — so there is your problem. If we don’t begin to address the problem now, 
we’ll be running around asking ourselves how the hell this Russian organized crime got so big and 
how we can get rid of them. 

“Money is power in crime as in everything else in this world,” Cotter continued. “If you ignore the 
fact that the Russians are reaping huge profits, you’re making a bad mistake. They’re not going to 
invest in IRAs. They’re going to buy businesses, they’re going to buy power. If we want to stop these 
guys, we better do it before they buy those things. If I’ve learned one thing from prosecuting the Mafia 
the last five years, I’ve learned that that’s the toughest kind of mob influence to rub out. It’s relatively 
easy to get the drug sellers, the gun sellers, the protection racketeers. It’s real tough to get the 
corporation that’s partly owned by the mob, or the union that’s been corrupted.” 

There was, in fact, one official at FBI headquarters in Washington, D.C., who did believe that if 
the government didn’t quickly launch a full-scale assault on the Russian mob, it would become 
untouchable. James Moody, a strapping six- foot-three organized crime expert, spent his youth in the 
backwoods of Oklahoma — a large, barefoot boy in overalls, hunting and fishing with his brothers. His 
great-grandfather was the first chief of police in Stroud, his tiny hometown. Moody joined the FBI at 
age twenty- nine in 1970 after a six-year stint in the military that included two tours in Vietnam. 

In August 1989, Moody was appointed chief of the FBI’s organized crime section. Examining the 
bureau’s past record, he realized that former director J. Edgar Hoover had not paid sufficient 
attention to the Italian Mafia, having instead devoted the majority of his resources to his corrosive 
obsession: combating domestic subversion and the perceived communist penetration of America. In 
the 1960s, when New York’s five Italian crime families controlled labor unions, the garment industry, 
and the docks, there was only one FBI field agent in Manhattan assigned to organized crime, whose 
very existence, Hoover had proclaimed, was “baloney.” The FBI had to wait until Hoover’s death in 
1972 to undertake a serious investigation of La Cosa Nostra, but by then, it had become a criminal 
colossus. Moody didn’t want to repeat that error with the surging Russian mob. 



Still, he was having trouble convincing colleagues of the seriousness of the threat; the FBI 
continued to be allowed to pursue individual Russian crimes only when it came across them. Then, in 
1 992, during the heady first days after the fall of communism, Moody received a visit from Mikhail 
Konstantinovich Yegorov, the first deputy minister of the interior for the Russian Federation. The 
Russian proposed an immediate cooperation agreement with American law enforcement to combat 
jointly the Russian mob. 

“I can’t do it because we have so much of a past history of being enemies,” Moody told Yegorov, 
after spending a day chauffeuring him around the American capital. “We’re going to have to kind of 
take it a step at a time.” 

But Yegorov would not be so easily dissuaded, and asked, “Okay, what can I do to improve the 
relationship and get it moving a little faster?” 

“I don’t know of a specific thing right now, but whenever I identify one, I’ll get back in touch with 
you,” Moody replied. 

It didn’t take Moody long to propose a specific plan. Two fugitives from Red Daisy — David 
Shuster and an accomplice — were known to be hiding out in Moscow. Moody wanted them, but 
Yegorov reminded him that the countries didn’t have an extradition treaty. 

“That’s true,” Moody admitted. “We don’t have any treaties whatsoever. But expel those guys from 
your country as being bad,” he urged him, as a way to jump-start relations. 

“About two days later, maybe three,” Moody recalled, “I come walking into my office and there’s 
a handwritten fax on my desk.” 

“Mr. Moody, we’ve got them,” the note said. “Please come and get them.” 

The previous day, a Russian commando unit wearing sky blue ski masks and bulletproof vests had 
stormed Shuster’s “import-export” firm in downtown Moscow; a furious gun battle ensued. When the 
shooting stopped, Shuster was on his back, being pummeled by members of the Russian Special 
Forces, but putting up an impressive fight all the same. “My understanding is that Shuster broke two 
sets of Russian handcuffs,” Moody said. “He’s not a very tall guy, but he’s strong as hell.” 

At first, the Russians didn’t know what to do with him; Shuster was, in fact, being illegally 
detained. If they put him in jail, the Russian federal prosecutor’s office would learn that the Ministry 
of Interior was covertly working with the FBI and the event could spark a Cold War-style political 
firestorm So in typically brutal Russian style, Shuster was transported to a dense forest outside of 
Moscow, dumped into a hole, and buried up to his neck in gravel. 

The Russians informed the FBI that they would have to retrieve Shuster within three days, at 
which point he would be released. The bureau scrambled, but obtaining a Russian visa on short 
notice wasn’t easy in those days, even for a U.S. government agency. Finally, Klaus C. Rohr, an old 
organized crime hand and the FBI’s assistant legate in Bonn, made it into Russia, and was taken 
directly to Shuster. “We don’t have any jurisdiction in Russia,” Rohr told him, after identifying 
himself as an agent of the FBI. “But we’re going to put you on a plane and take you back to the United 
States, and I’m going to arrest you once we get back to America. If you give me any problems, I’m 
going to leave you in the hole.” 

“No problem,” Shuster replied. 

Moody immediately took the fax from Yegorov relaying the news of Shuster’s capture to Larry 
Potts, the assistant director of the FBI’s Criminal Investigative Division. He hoped to use the 
document to make a case for starting a Russian organized crime squad and for cooperating with 



Russian police and security officials — initiatives vociferously opposed by the foreign 
counterintelligence side of the FBI, which considered the Russians to be an everlasting threat to 
national security perestroika or not. 

“You might say all of our obstacles suddenly disappeared” after the Shuster snatch, Moody 
explained. With the strong backing of Attorney General Janet Reno, the FBI set up a Russian 
organized crime subsection at its Washington, D.C., headquarters in early 1993, which would report 
directly to Moody, and which received full authority to investigate the Russian mob as an organized 
criminal cartel. 

Entrenched bureaucrats with Cold War hangovers continued to fight the new initiatives. It was 
only in May 1994 that the FBI office in New York, commanded by William A. Gavin, finally set up a 
squad specifically targeted to fighting Russian organized crime, and even then, he didn’t seem to 
realize just how late he had entered the battle. “I had a problem getting Gavin’s attention,” Moody 
explained, citing Gavin’s resistance to settingup a Russian force. “He said he liked to do his own 
thing. I said, ‘Okay, you go do your own thing, but you’re not going to do it with my manpower.’” It 
wasn’t until Moody started shifting personnel out of the New York office that Gavin capitulated. “I 
basically forced him into setting up the [Russian] squad,” Moody acknowledged. It was dubbed the 
C-24 squad. 

With few informants and only a superficial knowledge of New York’s 300,000-strong Russian 
emigre community, the FBI realized how handicapped it was in this effort. Based on its early reports, 
Raymond C. Kerr, the head of the new Russian unit under Gavin, believed that there were three or 
four major Russian crime families operating in Brighton Beach, with outposts in at least five other 
U.S. cities. The largest family consisted primarily of Jewish emigres, many of them from Odessa; a 
second family was from Tashkent, in Uzbekistan. The FBI had identified them as Muslim; people in 
the community insisted they were Jews. A third family was from Ekaterinburg, in Russia. As far as the 
FBI’s Gavin and Kerr could determine, each of the families had a Cosa Nostra-like pyramid structure 
with bosses or godfathers poised at the top, and beneath them the consiglieres, or advisers, and then 
the crews. 

But virtually everyone else in law enforcement with a knowledge of the Russian mob challenged 
the FBI model. “You can’t put them in a family,” one DEA official explained. “One day, two guys are 
trying to kill each other, and the next day they are doing a dope deal together.” He added that while 
Italian wiseguys often specialized in particular criminal enterprises, the Russians tended to be 
generalists. “Whatever opportunity affords itself — that’s what they do that day.” 

Meanwhile, with Shuster in hand, federal prosecutors moved forward with trying the Red Daisy 
case. Bootlegging czar Vladimir Zilber and six other Russians, as well as five Gambino crime family 
figures, had been indicted in Newark, New Jersey, for federal excise tax fraud, money laundering, and 
racketeering. But to solidify the case, the prosecutors still needed members of the criminal enterprise 
to cooperate and so they offered Shuster a deal he couldn’t refuse: if he agreed to testify against 
members of the massive bootlegging conspiracy, he would be given a letter that promises to petition 
the judge for leniency at sentencing as a reward for cooperation. 

As part of his proffer agreement, or deal with the government, which required him to confess to 
every crime he had ever committed, Shuster admitted that he was an international pickpocket, 
gasoline bootlegger, and had dabbled in dealing Turkish heroin. The government confiscated $6 
million from him, as well as seventeen cars and real estate, then stashed him in a safe house until the 



trial. 

Local police were furious that Shuster had gotten a deal. They suspected that he had ordered a 
jewelry store heist in Lodi, New Jersey, that had led to the shooting death of an off-duty cop. The 
investigating officers had several witnesses, including gang members who were at the scene of the 
execution. The federal prosecutors were given the information, but chose to ignore it. As far as the 
police were concerned, Shuster — who vehemently denied his involvement in the affair — had lied to 
get his letter, and had gotten off the hook for killing a cop. 

Zilber’s case was severed from the others; his attorneys alleged that brain damage from his attack 
on the FDR left him incompetent to stand trial. Whether or not he went to court hardly mattered. The 
government seized $550,000 in cash from his safe deposit box, and his $1.2 million house in New 
Jersey was put in foreclosure. His wife walked out on him His brother, Alex, fled with the family 
fortune, heading first for Brazil, and then to Moscow, where he eventually ran an aluminum factory 
and a casino for the Genovese crime family. Vladimir spends his days on a bench on the Coney Island 
boardwalk gazing absently out to sea, or holed up in his meager apartment, listening to CNN. He 
receives free meals at Rasputin and his old gang pitched in to buy him a live-in whore. “The one thing 
I hear that’s still functioning well without any inhibitions is a lust for women of all ages,” a federal 
prosecutor related. “Vladimir has no control over himself. If his grandmother was in the room, he’d 
go after her. I think, no pun intended, his brain is really shot.” Even with Zilber’s forced retirement, 
however, his crowning achievement, Rasputin, continued to be a magnet for wiseguys from Little Italy 
to the Volga. 

With Vladimir Zilber excused from testifying, Gambino capo Anthony “Fat Tony” Morelli became 
Red Daisy’s marquee defendant. Morelli was accused of directing subordinates to use intimidation 
and violence to collect the “mob tax” from the Russian bootleggers. A wealthy shylock and fence who 
was notoriously stingy, Morelli had retained high-priced attorney Barry Slotnick to represent his 
bagman Edward Dougherty, but then refused to pay his full fee. Slotnick’s enthusiasm for the case 
understandably waned, and when Dougherty deduced that Morelli was setting him up to be the fall 
guy, he joined the government’s growing cast of cooperating witnesses. 

Although Morelli could afford to hire the best criminal lawyer in New York for himself, he 
retained a second-string Gambino house attorney by the name of Richard Rehbock, who regularly 
annoyed juries with his constant, seemingly irrelevant objections and bombastic speeches. It hardly 
helped Morelli ’s cause when, about one month into the Red Daisy trial, Rehbock was the subject of a 
humiliating, frontpage expose in the New York Post. Star gossip columnist Cindy Adams quoted 
Rehbock’s estranged wife, Sylvia DiPietro, as alleging that her husband had hidden $100,000 of mob 
cash in a suit in his clothes closet, and kept three sets of accounting books. 

Having already angered Morelli as a result of his wife’s vexatious accusations, Rehbock further 
put himself in disfavor with his questionable trial strategy. Early in the case, for example, he made a 
colossal blunder when the government introduced Colombo soldier Frankie “the Bug” Sciortino’s 
personal phone book into evidence. The book was valuable to the prosecution’s case in that it listed 
Morelli ’s various private phone numbers, as well as the telephone numbers of numerous Russian 
bootleggers and Italian gangsters involved in the Red Daisy bootlegging scam, and therefore helped 
establish the web of relationships in the Russian- Italian bootleg combine about which Dougherty, 
Shuster, and others were going to testify. The FBI had arrested the Bug on September 29, 1989, 
initially for witness tampering; the agent responsible for his apprehension was called to the stand 



merely to place the confiscated phone book into evidence. 

In his cross-examination of the agent, however, Rehbock inadvertently helped prove the 
government’s case. Apparently unaware that the FBI agent was a well-known expert on organized 
crime and, moreover, had investigated every name in the Bug’s thick black book, Rehbock asked, 
“Agent, this doesn’t say, Phone Book of Frankie Sciortino’s Mob Friends, does it?” 

“No, it just says address book, or telephone book,” the agent replied. 

“Is the book entitled All My Gangster Friends? ” 

“No.” 

“The first entry, is he in the gas business?” 

“I don’t know.” 

“Is he a gangster?” Rehbock asked, his confidence growing. 

“I can’t tell you.” 

“Is he a person that’s listed on the little charts that you have on the wall in the F.B.I. office as an 
Organized Crime member?” 

“I don’t know.” 

Emboldened even further, Rehbock ventured forth. “How about the next one, Artie Goldstein, do 
you know him?” 

“I believe he is in business on Long Island — a shylock victim” 

“That’s what, a customer of Mr. Sciortino? Is that what you’re saying?” 

“He had a loan with Mr. Sciortino.” 

By asking the witness to characterize whether the people listed in Sciortino’s book were 
mobsters, Rehbock had opened the door for the government to do the same thing on redirect. 

“Let’s go through some of the names,” said prosecutor Robert Stahl. “Anthony in Florida.” 

“I believe that’s Anthony Trentascosta — a made member of the Gambino crime family,” replied 
the G-man. 

“Go to page forty-five. Benny A.” 

“That would be Benny Aloi. I believe he’s a Colombo made member.” 

After identifying a number of wiseguys, as well as Frankie “the Bug’s” loan shark victims, Stahl 
stopped just before Morelli’s name, by which point, “the jury was just laughing,” Stahl recalled. “We 
took a break, and Morelli says loud enough for us to hear, ‘Hey, Richie, whaddaya gonna do, the 
fuckin’ twenty years for me now?”’ 

The gangster’s prediction proved to be all too accurate; he was convicted and sentenced to exactly 
twenty years. In addition, eleven defendants were also convicted. Shuster was released from custody 
not long after the trial and is living somewhere in Brooklyn. Since he only testified against Italians, he 
has nothing to fear from the Russians. 

However groundbreaking an effort the Red Daisy prosecutions — and several successful 
bootlegging prosecutions thereafter — they scarcely had any repercussions on the Russian mob, which 
continued to make tons of money as it spread across America. “The cancer is beyond the lymph 
nodes,” New York State taxman Berger glumly noted in 1994. Nevertheless, recognizing the severe 
destabilizing effect that organized crime was having on Russia’s tenuous democracy, FBI director 
Louis Freeh told a Senate subcommittee in May 1994 that the war against the Russian mob “is critical 
— not just for the Russians but for all of us, because the fall of democracy there poses a direct threat 
to our national security and to world peace.” Freeh traveled to Russia, where he proposed launching 



“a lawful, massive, and coordinated law enforcement response” against Russian organized crime. He 
suggested setting up an international databank and training Russian police in American investigative 
methods. That year, the FBI established such an academy for ex-Eastern bloc law enforcement 
officials in Budapest. 

The relationship Moody worked so hard to forge quickly foundered. “There is a great distrust on 
the American side of the integrity of Russian law enforcement,” says Rutgers criminologist James 
Fickenauer, who was awarded a grant from the Justice Department to study Russian organized crime. 
“They want to sell their information. They think if the information is valuable, it must be worth 
something. These are badly underpaid people who are looking for money from wherever they can get 
it.” And, as the Genovese crime figure who backed Rasputin says, “We’ll always be able to pay more 
than the FBI.” 

However short it fell of its goals, the Red Daisy campaign did mark the belated recognition by 
American law enforcement of how serious a threat the Russian mob actually posed. But although the 
FBI, along with other local and federal agencies like the DEA and Customs Bureau, could now focus 
some of its energies on penetrating the Mafiya s extensive web of influence and corruption, the effort 
may have come too late. For looming just over the horizon was a force that dwarfed the Brighton 
Beach Mafiya in size and power, and it was headed directly for U.S. shores. 



5 


RED TTDE 


In May 1991, while eating breakfast at the National restaurant in Brighton Beach, Emile Puzyretsky 
was shot nine times in the face and chest. Fifteen diners witnessed the execution. “Ya nechevo ne 
znayu, ” they all told detectives, “I don’t know anything” — even though the killer had carefully 
rummaged around the restaurant floor on his hands and knees, looking for the spent cartridges, some 
of which had become lodged under their tables. The reason for their silence was simple: no one in the 
restaurant wanted to be branded a stukatch, snitch, and risk a surprise visit from the killer — Monya 
Elson. After a six-year absence, the fearsome hit man had returned to Brighton Beach to claim his 
warm spot in the Russian mob. 

“There are a lot of rumors in Brighton Beach that I killed Puzyretsky,” Elson said with a laugh. 
“You can say that I killed him to take care of business.” 

Elson had spent most of his years away stewing in filthy, ovenlike Israeli jails, to which he had 
been sentenced in 1984 after his effort to seek fame and fortune in the cocaine smuggling business had 
not gone as planned. Being marooned in an oppressive, flea-infested tent city for convicts in the 
barren, lunarlike Negev Desert was hardly what Elson had in mind when he set out to claim his place 
in the criminal hierarchy. To make matters worse, he heard stories about his contemporaries in 
Brighton Beach making big names for themselves in the Russian underworld. He yearned to return 
“home” to Brighton Beach and establish himself as one of the most respected men in the Russian 
mobs’ power structure. Prison did bestow on Elson one piece of good fortune: he became the cell 
mate and bodyguard for convicted spy Shabtai Kalmanovitch, cementing a criminal alliance that 
would pay big dividends for both men. 

On August 19, 1990, Elson was released from jail, bursting “with a lot of ideas” about bringing 
some order to the mobocracy that ruled Brighton Beach. But first, he had some unfi nished business to 
attend to in Moscow. Elson had learned while in prison that a well-known Russian hood had been 
spreading word that Elson was a musor, a rat. Supposedly, Elson had exposed some Russians running 
an international gun ring, a charge that, though he vehemently denied it, had circulated rapidly 
throughout the criminal grapevine. Elson was furious that his reputation was being maligned. “If he 
doesn’t like one word that comes out of your mouth, you’re dead,” says an acquaintance of Elson’s. “I 
said, ‘Hey Monya, you can’t kill people for that.’ He said, ‘Yes I can! ‘” 

“He said I was a musor. ” Elson recalled of the man who was bad-mouthing him “I wanted to kill 
him. He thought that because I was a Jewish guy, and I had presumably left Russia forever, that it 
would be okay to play with Monya.” 

As soon as he arrived in Moscow Elson quickly tracked down the malefactor and, with a single 


swing of an ax, hacked off his arm, leaving him to bleed to death. “Half the criminals will think I 
killed for revenge,” Elson remarked. “The other half will think that maybe he knew something, and I 
killed [him] to shut his mouth.” Citing an old Russian proverb, Elson explained his motive as: 
“Revenge is the sweetest form of passion!” 

His business in Moscow complete, Elson, then thirty-nine, returned at last to Brighton Beach. This 
time, he knew precisely what he wanted to achieve, and he knew how to do so. He quickly assembled 
a team of experienced hit men, master thieves, and extortionists — a group the FBI dubbed “Monya’s 
Brigada” — and dispatched them to take over a large swath of Brighton Beach. He established his 
headquarters in Rasputin, where he received $ 1 5,000 a week from the Zilbers and a percentage of the 
raucous cabaret’s revenues. “I was the new epicenter for Russian organized crime,” Elson boasted. 
“Before, it was bullshit! It wasn’t fucking so tough.” 

Elson’s braggadocio had a deadly bite. One of his first deeds was to murder Puzyretsky, who had 
been employed to defend a large Russian bootlegging combine that competed with the Zilber brothers 
for dominance in the gasoline business. Elson then methodically slaughtered many of the Zilbers’ 
rivals, propelling the three men to the top of the Russian criminal pyramid. 

This was Monya’s golden age — a few short years between 1990 and 1993. With a small army and 
his savage determination, he seemed unstoppable, extorting and killing with impunity. “Monya was a 
nut,” said Gregory Stasiuk, the investigator for the New York State Organized Crime Task Force. “On 
one wire, Elson said to a tardy loan shark victim, ‘You are making me so crazy, I don’t know whether 
I should come over and kill you now or later.’” 

“Monya loves to kill,” said a Genovese wiseguy. “He was a goon on a short, hot leash.” 

Monya’s Brigada was soon becoming immensely wealthy, dealing in everything from coke to 
precious gems, which he allegedly smuggled from Manhattan’s jewelry district to Moscow. A 
December 1994 secret FBI intelligence report noted that “Elson is a principal player in the control of 
the export of diamonds, gold and other jewelry from the United States and other countries to Russia. 

A carat of diamonds can be obtained for $1,500 in New York, and sold for $10,000 in Moscow. 

Elson receives a kickback on every diamond and gold deal he brokers in Moscow. An unknown 
Austrian front company has been set up to receive the kickbacks. This concern has a permit from the 
Russian government to import these items. Elson believes this situation gives him ‘leverage’ with 
other O.C. [organized crime] players.” 

At least one rival Russian mobster, however, refused to accede to Elson’s growing power. Boris 
Nayfeld, once the underling of the Little Don Evsei Agron and of Marat Balagula, had emerged as an 
estimable force in his own right while Elson was still confined in his Israeli prison cell. By the time 
Elson resurfaced in Brooklyn, Nayfeld was shuttling between Antwerp, where he lived in a luxury 
apartment with his mistress, and Staten Island, where he resided with his wife and children in a 
sumptuous home on Nevada Avenue across from a nature preserve. 

Nayfeld came to prominence by running a heroin ring of French Connection proportions. He 
obtained the drugs in Thailand, smuggled them into Singapore, and then stashed them in TV picture 
tubes and shipped them to Poland through a Belgium-based import-export company, M&S 
International. From there, Russian couriers from Brighton Beach with valid U.S. passports “bodied” 
the heroin into the United States through New York’s Kennedy Airport. “Customs never looked,” said 
a DEA official. “Poland wasn’t an obvious transshipment point for drugs. It’s not Bogota or Bangkok. 
They shotgunned each plane with three, four, or five couriers, all unknown to each other. They moved 



eight to ten kilos per flight, and it went on a good year before we caught on to it.” Eventually, the 
couriers expanded their operations to Boston, Chicago, and elsewhere, while the drug smugglers 
continued to make millions of dollars a planeload. 

In New York, part of the drugs was sold to Sicilian mobsters out of a dive in Coney Island, while 
another faction of the ring dealt the heroin to Hispanic customers out of the S&S Hot Bagel Shop, next 
to Katz’s Delicatessen on East Houston Street in Manhattan. The DEA was impressed with the 
sophistication of the mobsters’ business. “What’s unique,” said one official admiringly, “is that these 
guys were actually controlling it from the source to the street.” 

Elson, however, viewed his rival’s expanding empire with displeasure. “I knew when I got out of 
jail that Biba [Boris Nayfeld’s nickname] would still be in the ballpark. He would be a fucking 
problem,” Elson said derisively. “Everybody said Biba, Biba. Biba Shmeeba. I said he was a piece 
of ass. He s a fucking nobody. And somebody sent word to Biba that I’m cursing him. And I said yes, 
I want to meet the motherfucker. He was a piece of shit! For this reason, I declared the war! I said, he 
cannot be what he wants to be! He’s a musor in his heart. He wanted to be somebody. He was never 
nobody. You know to be a godfather you have to have leadership qualities. He don’t have any 
qualities.” 

Nayfeld responded to these taunts with a $100,000 contract on Elson, setting the stage for a 
massive gangland war. “They were like two gunslingers,” said Stasiuk, “who had to prove 
themselves top gun.” 

On a frigid night shortly before the Russian New Year in January 1991, Elson’s men taped a 
powerful bomb under the muffler of Nayfeld’s car. The following afternoon, Nayfeld drove the car to 
Brooklyn to pickup his children at school. As the engine idled, the youngsters piled into the backseat. 
Just then, a maintenance man pointed to an object hanging from the chassis. The bomb, which was 
designed to have been activated by heat from the muffler, had become dislodged and failed to 
explode. “It could have taken out a city block,” said an assistant U.S. attorney. 

Nayfeld wasted no time in seeking revenge. On May 14, 1991, Elson was speaking with some 
friends on the corner of Brighton Beach Avenue and Sixth Street in front of the Cafe Arabat, a Russian 
mob haunt. At exactly 3:00 P.M., a hit man sauntered up and pumped five dumdum bullets into Elson’s 
belly. “I never lost consciousness,” Elson insisted. “I wanted to shoot this guy. You can’t imagine how 
hot and painful the wound was. But I saw the guy, a black man, run away. I was going to shoot him. I 
didn’t have the strength to shoot him” A friend rushed Elson to Coney Island Hospital. “The bullets 
made two holes in my stomach. My liver was severed. My pancreas was shattered. One bullet lodged 
in my left kidney and exploded.” Doctors removed the kidney, along with twenty feet of intestine. “If I 
had gotten there twenty seconds later, I would have been on a slab. They put me on a stretcher and I 
lost consciousness.” 

Elson developed peritonitis. “There was a lot of puss in my pancreas, which was abscessed. 

There was a lot of puss in my stomach. And the doctors said to my wife: ‘He’s going to die now.’ And 
they put a tube into my heart.” Elson claims he was pronounced dead and wheeled into the morgue, 
but when “I heard ‘morgue,’ somehow I reacted. I twitched my toe as if to say I’m alive. They put me 
back in ICU. Then I had an operation. They told my wife I had a fifty-fifty chance; if I survived the 
first forty-eight hours, I might live. ... I spent twenty-eight days in intensive care; my wife was 
advised to say her farewell to me.” 

Elson recovered and quickly made another attempt at getting even with Nayfeld. One of Nayfeld’s 



paid assassins, Alexander Slepinin, was a three-hundred-pound, six- foot- five-inch veteran of 
Russia’s Special Forces, who had served in Afghanistan during the war against the Mujahedeen, the 
Islamic fundamentalist rebels. Nicknamed the “Colonel,” he had tattoos of a panther and a dragon on 
his upper torso, signs that he was a veteran of the Gulag. He was an expert in a variety of martial arts, 
and kept a large collection of swords and knives, which he used to dismember his victims in his 
bathtub before disposing of the body parts. He carried a business card that said he specialized in the 
techniques of mortal combat. 

On a June morning, three shooters, including Elson, according to eyewitnesses and police 
officials, ambushed Slepinin as he sat in his 1985 Cadillac Seville on a residential street in the 
Sunset Park section of Brooklyn. “He started crying, the big motherfucker, and admitted that Nayfeld 
had paid him to kill me,” Elson snorted gleefully. Breathing convulsively, Slepinin “asked for 
forgiveness.” 

“We are not in the church,” growled one of the hit men. 

The enormous man tried to squeeze his bulk through the passenger door, but was shot three times 
in the back, the bullets carefully aimed to ensure that his death would be agonizing. Thrashing and 
moaning, he continued to beg for his life, but two bullets to the back of the head finished off the 
Colonel. “He was huge, big, and mean,” Elson said. “He was a monster, a cold-blooded killer. The 
FBI has to give me an award.” 

A few months after the Colonel was butchered, Elson received a tip that Nayfeld was planning to 
attend a meeting in a trendy part of Moscow. Elson’s informant knew the exact time and location of 
the conclave, as well as Nayfeld’s route to and from the gathering. Elson gave the contract to kill 
Nayfeld to Sergei Timofeyev, who was nicknamed “Sylvester” because of his resemblance to film 
star Sylvester Stallone, and his lieutenant Sergei “the Beard” Kruglov, two of the most vicious 
gangsters in Moscow. According to Elson’s informant, Nayfeld’s car was supposed to pass a high- 
rise apartment tower that was under renovation. Because its windows were covered with cardboard, 
an Olympic marksman, hired by Timofeyev and Kruglov, had to take aim at Nayfeld as his car 
approached the building by squinting through a peephole. But Nayfeld must have had a premonition, 
for at the last moment he pulled a hasty U-turn and disappeared into traffic. “It was Biba’s miraculous 
escape,” said a still bewildered Elson. “He had a lot of miracles.” 

As did Elson. On November 6, 1992, Elson arrived in Los Angeles’s Plummer Park, a meeting 
place for Russian emigres who gambled their welfare checks and drank cheap vodka. Elson, who was 
there to meet a friend, suddenly decided to return to his car to retrieve something he had forgotten. As 
he walked back to the parking garage, a black man crept up behind him and shoved a pistol against the 
base of his skull. Elson heard the click of its trigger, but the weapon jammed. “Can you imagine if the 
gun went off?” Elson asked. “My brains would have been scrambled eggs.” Elson spun around and 
wrestled the man to the ground, kicking away the gun. The assassin grabbed it back and, this time, 
successfully fired it repeatedly, backpedaling until he was able to escape. Elson was hit in the left 
hand, severing a tendon. At the hospital, he gave a fictitious name, and told detectives that he had 
fought off a mugger who was trying to steal his $75,000 Rolex watch. He later slipped out of the 
hospital without paying his bill and traveled to Arizona for painful reconstructive surgery. Before he 
left Los Angeles, however, another would-be assassin attempted to place an explosive inside his car. 
“The shnook couldn’t figure out how to wire the bomb,” says a law enforcement source. “The device 
exploded in the man’s hands, blowing them off.” 



As the Elson-Nayfeld war raged on, dozens of gangsters were massacred. Some were gutted like 
sheep; others had their throats cut. Some were castrated with crescent- shaped knives; both the 
implements and the body parts became favorite gangster souvenirs. Though Elson and Nayfeld tried to 
enlist other influential gangsters to their respective sides, neither could gain a decisive advantage, 
and the bombs and bullets continued to explode from Brighton Beach to Moscow. 

At one point Rafik Bagdasaryan, nicknamed Svo, a mighty vor from Soviet Armenia, tried to 
intervene on Nayfeld’s behalf. Svo was known as the diplomat of the Russian underworld, and he 
was so highly respected that, when he was poisoned to death in prison some years later by Chechen 
gangsters, his body was flown from a secret military airstrip near Moscow to his native home in 
Yerevan, the capital of Soviet Armenia. Svo’s funeral was held with a degree of pomp usually 
reserved only for members of the Politburo. His countrymen thronged his coffin, and the streets were 
showered with rose petals. Mob bosses and politicians came to pay their last respects. Lights were 
turned on for forty-eight hours in Yerevan, where the power supply was erratic at best. 

Seeking to put an end to the deadly struggle, Svo telephoned Elson’s vaunted ally, the Beard. “I 
love you like a son,” said Svo. “I know you had a meeting with Monya in Yerevan, and I had a 
meeting with him in Yerevan. And Monya spoke about killing Biba. I’m asking you like my son, I like 
Biba, and please don’t get involved in this.” 

The plea went unheeded. Elson learned from another informant about the impending arrival in 
Moscow of Shlava Ukleba, who worked for Nayfeld as an international heroin trafficker. On a 
blistering cold day, Ukleba’s hotel room was rocked by a thunderous explosion, which obliterated 
five adjoining rooms. “But nobody was hurt. It was wintertime, and Ukleba ran out of the rubble in 
his underwear. He ran all the way to Austria,” chortled Elson. 

Then, on July 26, 1993, as Elson, his wife, and his twenty-five -year-old bodyguard, Oleg 
Zapivakmine, were emerging from a black Lexus in front of the couple’s Brooklyn apartment, a car 
careened toward the curb. The trio was sprayed with a “Streetsweeper” shotgun and Uzi submachine 
gunfire. Elson, who was carrying a briefcase with $300,000 in watches and jewelry from New York’s 
diamond district, was shot in the back and thigh. His wife, Marina, bolted from the Lexus and hid in a 
crawlspace, behind two garbage cans. A masked man leapt from the attacker’s vehicle and pumped 
two shotgun blasts into the cowering woman from several yards away. Seventeen pellets tore through 
her face, throat, chest, and shoulder. 

An all-out gun battle ensued with shotgun pellets peppering the entire length of the seventy- five- 
foot apartment house, penetrating neighbors’ cabinets and walls. “It was like the Persian Gulf War,” 
Elson recalls. More than a hundred rounds were exchanged between the hit team and Elson and 
Zapivakmine, who was only lightly grazed in the stomach. 




Top Left: Evsei Agron, Russian organized crime’s first American don. (New York Times 
Pictures) 

Middle Right: Agron was gunned down inside his Brooklyn vestibule on May 4, 1 985. 
(courtesy of James Rosenthal) 

Botttom: Boris Nayfeld, a strong-arm man for Agron who later became a global heroin dealer 
and Monya Elson’s nemesis. {New York Times Pictures) 




Monya Elson, the Russian Mafiya ,’s most fearsome hit man. (Courtesy of Novoye Russkoye 
Slovo) 



Top Right: Marat Balagula, Brighton Beach’s second godfather. He took the American Russian 
Mafiya global. (Courtesy of James Rosenthal) 

Middle Left: Yuri Brokhin and his wife, Tanya. 

Botttom Right: The floor show at Rasputin, a cabaret owned by the Zilber brothers and also 
Monya Elson’s headquarters. (© Eli Reed/Magnum Photos) 

Hockey superstars the FBI and the Royal Canadian Mounted Police have connected to major 
Russian crime figures: 



Top: Viacheslav “Slava” Fetisov, playing in the 1988 Stanley Cup Finals for the Detroit Red 
Wings. (Robert Laberge/ All sport) 

Middle Left: Valeri Kamensky, playing for the New York Rangers in December 1 999 (Jamie 
Squire/ Allsport) 

Botttom: Pavel Bure, playing for the Vancouver Canucks in 1988. (Craig Melvin/ Allsport) 




Top: AP/Wide World Photos 

Middle: Vyacheslav Ivankov, the most powerful vor v zakonye, in America. He was 
imprisoned in the United States on June 8, 1995, for extortion. 

Bottom: Felix Komorov, the man the FBI says is one of Ivankov’s top associates in America. 
(Sarah Krulwich/NYT Pictures) 



Top: Vatchagan Petrossov, Ivankov’s “drug adviser” and Denver restaurateur, 
bottom: Ivankov’s handwritten death threat, sent to the author inserted inside a Hallmark 
greeting card. 




Top: Porky’s Strip Club in Miami, owned by Ludwig “Tarzan” Fa in berg. 
Middle: Flyer from Porky’s. 

Bottom: Tarzan and Juan Almeida sampling the stock in a Swiss wine cellar. 




Tarzan being shown subs in Kronstadt. 



Tarzan and friend in Russia. 



An armored car bringing sacks of $100 bills for the Russian Mafiya to be loaded on a Delta 
flight to Moscow at JFK Airport, New York. (© A. Tannenbaum/SYGMA) 





Semion Mogilevich, the man the CIA calls the most dangerous gangster in the world. 

Mogilevich took out a hundred-thousand-dollar contract to kill the author, according to the New 

York Times. (Courtesy of ABCNews World News Tonight) 

Incredibly, the two men managed to fend off their assailants. “You missed me. “You missed me! 
You missed me!” Marina shrieked all the way to the hospital. “She had seventy stitches,” Elson says. 
“You won’t believe how many bullets and pellets she has in her chest.” To this day, Marina has so 
many bullet fragments lodged in her body that she sets off metal detectors at airports. 

Marina had been deliberately targeted. “We know she joined Monya on killing sprees,” observed 
the DEA’s Louis Cardenelli. “Our CIs [confidential informants] said that’s the only way you could hit 
a woman.” Moreover, if she had survived her husband, Cardenelli added, Marina had the authority to 
order Monya’s Brigada to exact a swift and terrible revenge. (Mrs. Elson refused to comment.) 

Having learned of the shootout, Major Case Squad detective Ralph Cefarello raced to the 
hospital. “Elson was laying there waiting for the docs to work on him, and I’m trying to question 
him,” Cefarello recalled. “He played his usual game. He said politely, ‘I’ll tell you anything. I want 
to know who did this to me. But I didn’t see the shooters.’ Before exiting the room, Cefarello brushed 
by Elson’ s bed, intentionally pulling off the bed sheets. The gangster was stark naked. The word 
MONYA, framed by two green bands, was emblazoned around Elson’s penis. 

“I had a kid in uniform who spoke Russian standing guard. They had no way of knowing he was 
Russian-speaking. As soon as I left the room, Elson turned to his wife and said, ‘Don’t tell these pigs 
a thing!”’ 

A short time after the incident, the FBI visited their bullet-marred apartment complex. 

Zapivakmine was sitting on their front porch, carefully surveying the street. In a confidential report of 
the meeting, the FBI wrote, “Elson indicated that he knew who was behind the shootings. Elson was 
particularly angry because of the shooting of his wife, and he stated that he would not rest until he gets 
his revenge. He said that his revenge will not occur in the United States but will happen somewhere 
overseas.” 

Unbeknownst to Elson, his bodyguard had been warned in advance of the shooting. A 
representative of the People’s Court — the authoritative group of Russian organized crime leaders in 
Brighton Beach — told Zapivakime that Elson was going to be killed because he had committed too 


many unauthorized murders and extortions. They cautioned him not to interfere, according to a 
classified FBI report, but Zapivakmine ignored the admonition and had seriously injured a member of 
the “Streetsweeper” hit team who was brought to the same Coney Island hospital that was treating the 
Elsons. Two weeks later, Zapivakmine was shot in the back of the head while changing a flat tire in 
Brooklyn. 

With Zapivakmine’s execution, the balance of power began to shift. “Elson had very capable guys 
that he brought in as reinforcements from Israel and the former Soviet Union,” said a Russian 
wiseguy. “But every week, one of them would get their heads blown off by a shotgun blast. Even 
Monya realized it was time to get out.” 

However, it was not Boris Nayfeld who finally convinced Elson to flee to Europe in November 
1 994. The force behind the “Streetsweeper” incident, the man who posed the first serious challenge 
to Elson’s hegemony and had more resources than any other Russian gangster who had come before 
him, was Vyascheslav Kirillovich Ivankov, and the dreaded vor had come to the United States from 
Moscow to take over the Russian Jewish mob in America. 

Ivankov had begun his outlaw career in the back alleys of Moscow in the early 1960s. By age 
fifteen, he was a cocky, bare-knuckled street brawler who beat up people for the fun of it. His 
hooliganism eventually attracted the attention of a large criminal organization headed by a notorious 
gangster named Gennadiy “the Mongol” Korkov, who specialized in turning Soviet star athletes and 
martial arts masters into extortionists. Under Korkov’s tutelage, Ivankov was trained to shake down 
black marketeers, bribetaking bureaucrats, and thieving store managers — all of them underground 
millionaires who could hardly risk reporting thefts to the State. Ivankov’s crew invaded their homes, 
dressed as Soviet militiamen, armed with forged identification papers and search warrants. This 
“militia” would confiscate the victim’s valuables, inventory the goods, and order the owner to show 
up in court the next day for further questioning. Of course, the merchandise would disappear along 
with Ivankov. A sophisticated racketeer for his day, the Mongol also added intelligence and 
counterintelligence wings to his operations, a lesson Ivankov would not forget. 

With a taste for theatrics, the young Ivankov set out to build a mystique around himself. He 
expropriated the name of the legendary Russian bandit Yaponchick, which literally means “the little 
Japanese” in Russian. The original Yaponchick, whose given name was Mishka Vinnitsky, ran the 
seamy Jewish underworld in the pre-revolutionary Black Sea port of Odessa. Yaponchick and his 
gang became folk heroes when they joined the Red Army during the Revolution. Gang members 
tattooed their chests with the communist Red Star. Instead of being rewarded for their revolutionary 
zeal, however, they were imprisoned by the Bolsheviks soon after the war. (Yaponchick has since 
been the subject of many books and films, most notably Benya Kirk, a 1926 Soviet, Yiddish-language, 
silent film written by Isaac Babel.) 

Ivankov’s own career was temporarily derailed in 1974, when the manager of a Moscow cafe 
complained to the real militia about his extortion demands. An entire detachment of Soviet militiamen 
was dispatched to apprehend Ivankov, who was found hiding in his car in a Moscow suburb. A 
sensational gun battle ensued, and Ivankov made a daring getaway. The shoot-out only enhanced his 
growing legend as a social bandit who stole from the wealthy parasites living off the workers. 
Ivankov also distinguished himself for his bravado, for while the U.S.S.R. had plenty of common 
criminals, they virtually never used weapons against the authorities. 



Ivankov quickly became the target of one of the biggest manhunts in Soviet history. After six 
months on the run, the weary brigand finally turned himself in, claiming that he was not a criminal at 
all, but a paranoid schizophrenic. The more serious charges against him were dropped, and he was 
sentenced to five years in a Soviet psychiatric detention hospital. Eventually wearying of feigning 
mental illness, Ivankov asked to be retested and was subsequently sent to a penal colony. There he 
was quickly inducted into the brotherhood of the vor v zakonye. 

After he was released from prison, Ivankov went back to work for the Mongol, becoming his 
senior associate. During the next two years, Ivankov committed hundreds of extortions and armed 
robberies, leaving behind him a long trail of mayhem and acts of mindless savagery. In 1 98 1 , for 
example, Ivankov and his crew broke into the apartment of a well-to-do black marketeer, brandishing 
their weapons. Handcuffing the terrified man to a bathroom radiator, Ivankov threatened to douse him 
with acid if he didn’t pay back an alleged debt. With a gun jammed to his forehead, he was forced to 
sign a promissory note for 100,000 rubles; Ivankov then stole a Dutch Masters painting, a stamp 
collection, and 3,000 rubles. Ivankov was arrested for the home invasion in 1982 and charged with 
robbery, aggravated assault, and extortion, for which he was sentenced to fourteen years in a 
maximum security prison camp in Siberia. Because several of those arrested with him were famous 
Soviet athletes who had turned to crime, the authorities saw to it that the case received no publicity. 

Back in prison, the despotic Ivankov once again became the top vor, enforcer, and kingpin. He 
stabbed one inmate in the back and clubbed a prison guard over the head with a metal stool. After 
several of his victims died, he was placed in a brutal punishment cell for a year. But the murders did 
not add time to Ivankov’s prison sentence, because in the code of the “Zone,” or the Gulag, the 
victims had brought their deaths on themselves by failing to obey the code of ethics of the thieves-in- 
law. 

Even from prison, Ivankov was able to maintain control over the vast Vladivostok region in the 
Russian Far East, and increased his criminal power by establishing business enterprises as far away 
as Moscow, from which he received regular and substantial income. Once, with the help of two 
Russian accomplices from Toronto, he persuaded several major Russian banks and investors to buy 
$5 million worth of shares in a phony Siberian gold mining company. (One of the Russian banks sent 
a hit man to Toronto to terminate Ivankov’s co-conspirators, but the Mounties arrested him.) 

While Ivankov served out his sentence in the frigid wastelands of the U.S.S.R.’s vast penal 
colonies, major changes were taking place behind closed doors in Soviet crime and government. As 
early as the mid-1980s the KGB had notified the gray cardinals around Politburo boss Konstanin 
Chernenko that the Soviet Union’s socialist economy was doomed; chronic corruption, inefficiency, 
and the enormously expensive arms race with the United States had bankrupted Lenin’s revolution. 
The KGB recommended two options: one was a first-strike nuclear attack against the West, which 
was seriously considered by xenophobic elements who couldn’t bear the prospect of losing the Cold 
War. The second option was to loot the bountiful motherland of its remaining wealth. 

During Gorbachev’s reign, the KGB began to hide communist party funds abroad, according to 
top-level Western and U.S. intelligence sources. The KGB consequently set up some two thousand 
shell companies and false-flag bank accounts, some as far away as Nevada and Ireland. Over the next 
eleven years, perhaps as much as $600 billion was spirited out of the country, in the greatest looting 
of a nation in world history. No matter what happened to Russia during a political transition from 
communism to a quasi-market economy under perestroika, the party bosses had effectively guaranteed 



that they would continue to control key state resources and property. Stealing such a massive amount 
of wealth, however, turned out to be a larger job than anyone had expected. The KGB ran out of 
people to sequester assets, so they expanded their operation to the criminal Mafiya, explained 
Richard Palmer, a twenty-year veteran of the CIA, whose final assignment was as a station chief in 
the former Soviet Union from 1992 to 1994. 

In its haste to stash party funds, the KGB modernized the relatively small Soviet Mafiyas, which 
had previously been based along neighborhood, regional, and ethnic lines. They were outfitted with 
everything from the latest high-tech computers to sophisticated communications gear. After 
communism crumbled, many KGB men, military officers, and government officials went to work for 
the emerging Mafiya organizations. Young Russian entrepreneurs sporting MBAs from the best 
schools in Russia and the West also swelled their ranks. 

By the early 1990s, organized crime in the Soviet Union had evolved into a diabolical troika 
consisting of gun- wielding mobsters and vors; nomenklatura types and the black marketeers that 
tailed them like pilot fish; and many current and former members of the government, military, and 
security services. Nevertheless, vors like Ivankov still represented the pinnacle of organized crime. 
Like made guys in the American La Cosa Nostra, Russia’s eight hundred thieves-in-law held varying 
degrees of position and power depending on their abilities. A vor could reign over a region as vast as 
Siberia, with a representative or supervisor (smotryashchiy) accountable to him in every regional 
city in which he had influence. A vor might control many Mafiya groups simultaneously, head an 
association of gangs, or lead a single gang. Some thieves-in-law might be part of the supply group 
(obespechenie) or the security group (bezopasnosti ) in a Mafiya organization. 

By the mid-1980s, there were nearly nine thousand criminal gangs in Russia with 35,000 
members. During “privatization,” the period when the government put everything from the great oil 
and gas giants to hotels in downtown Moscow up for sale, organized crime and the Russian 
government continued their mutually beneficial relationship. The criminals needed export licenses, 
tax exemptions, below-market-rate loans, business visas, and freedom from arrest and prosecution for 
their crimes. All of this and more was available from corrupt bureaucrats, especially since i nfl ation 
had wiped out the savings of everyone in Russia who wasn’t participating in the grab. A dozen or so 
“oligarchs” took over vast state properties and became among the wealthiest men in the world. As for 
law and order, police officers, for example, who didn’t steal or take bribes were unlikely to be able 
to feed their families. A survey of Muscovites conducted in September 1994 by the Russian Academy 
of Sciences revealed that 70 percent of the respondents would not ask a Moscow police officer for 
help when threatened by a crime. 

Soon nine leading Mafiya organizations controlled more than 40 percent of Moscow’s economy. 
(Some experts say the figure is at least 80 percent.) Practically every business, from curbside kiosks 
to multinational corporations, paid protection money. “In 1917 we had the Bolshevik revolution, and 
all the rules changed,” a Russian banker declared. “In the late 1980s, we had a Mafiya revolution, 
and the rules changed again. If you’re a businessman you can either pay the mob, leave the country, or 
get a bullet through your brain.” Russian criminal groups penetrated virtually every level of the 
government, from Russia’s parliament, the Duma, to President Yeltsin’s inner circle. Even the 
immense arsenals of the Soviet armed forces were plundered. 

But in the gold rush years of the late 1980s and early 1990s, competition for the Soviet Union’s 
booty inevitably led to gangland turf wars. The Chechen Mafiya, which had always been a powerful 



force in Moscow’s turbulent underworld, called in reinforcements from their mountain redoubt in the 
republic of Chechnya. Relentless as the Golden Horde that had thundered across the Russian steppes 
and sacked the city in the Middle Ages, the group came close to gaining control over the city’s 
rackets, leaving the formerly dominant Jewish, Georgian, Armenian, and Slavic mobs in disarray 
Corrupt Soviet oligarchs started preparing their departure in order to avoid the carnage. 

Ivankov’s panicky colleagues desperately concluded that they, too, needed additional troops and 
that, more importantly, it was time to spring the powerful vor from jail. Ivankov’s release was 
scheduled for late 1995, but in early 1990 two of the nation’s most powerful mafiosi orchestrated a 
letter-writing campaign in support of his early parole. One of them, Otari Kvantrishvili, was a 
brawny, forty-six-year-old native of the former Soviet republic of Georgia. A national sports hero, 
Kvantrishvili had been a wrestler on the Soviet Olympic team, an all-European champion wrestler, 
and chairman of the prestigious Russian Athletes Association, a government- sponsored union. In the 
late 1980s, he set up the Twenty First Century Association, ostensibly as a charity to aid needy 
Russian athletes. Although the association also established banks, casinos, and other enterprises, in 
fact, “this notorious company has never had any legitimate business interests and was structured only 
as a front to conceal proceeds of extortions of Russian businessmen” and other crimes, as a secret 
FBI report revealed. 

Ivankov’s other powerful patron was Joseph Kobzon, the dapper, sixty-year-old Russian pop 
singer. A cultural icon, Kobzon was a household name to generations of Russian music lovers. He 
frequently brought Soviet leader Feonid Brezhnev to tears at public functions with his soulful 
renditions of patriotic ballads. But for decades, Kobzon had been using his star persona to hide a 
sinister criminal identity. According to the CIA, Kobzon was Russia’s “crime Czar”; a secret FBI 
document described him as the “spiritual leader” of the Russian Mafiya in Moscow, who was “highly 
respected... because of his intelligence, contacts, shrewdness and ability to help when [organized 
crime] groups get into trouble. Not just anyone can gain his assistance, however; only high-level 
[mobsters]. He settles disputes between groups and belongs to no particular organization.” 

“Kobzon,” says the FBI’s James Moody, “is definitely one of the most influential criminals in 
Russia. He is very, very high-ranking. And very dangerous.” 

In the crime-addled Soviet Union, Kobzon’s true status as a top crime boss didn’t dissuade the 
Soviet government from appointing him to the Russian Olympic Committee, making him the dean of 
the School of Popular Music at Moscow’s Music Academy, as well as Moscow’s minister of culture, 
among other prestigious positions. The singer has twice been elected to the Duma. During his first 
stint in the late 1980s, he was formally introduced to the U.S. Senate by New Jersey Democrat Frank 
Fautenberg. Kobzon was elected to the Duma a second time in 1998 from a tiny, impoverished 
autonomous district in eastern Siberia near Russia’s border with Mongolia, despite never having 
lived there — or even campaigning there during the election. Vladimir Grishin, the rival candidate, 
claimed that Kobzon’s campaign manager doled out 100 million rubles in donations to local charities, 
35 million rubles to a local hospital, and allegedly promised additional cash and a new fleet of buses 
for the district if he were victorious. Grishin filed fraud charges with the Central Election 
Commission, but nothing ever came of it. 

One of Kobzon’s most lucrative activities, however, was smuggling arms. For example, he was 
allegedly able to help maneuver a corrupt Russian Defense Ministry official, Viktor Atiolkin, into the 
top job at the Rossvoorvzheniya, the only government agency that can authorize the export of weapons 



from Russia. “This position can greatly assist OC figures in arranging sales of tanks, rocket-propelled 
grenades, surface-to-air missiles and possibly even nuclear materials,” explains the FBI report. In 
one instance, Kobzon brokered the sale of surface-to-air missiles to Iran, according to a federal 
wiretap affidavit and a top investigator for U.S. Customs who specializes in the Russian mob. 

Thanks to the efforts of Kvantrishvili and Kobzon, President Gorbachev and Supreme Soviet 
Chairman Boris Yeltsin received hundreds of additional letters from famous Russian scientists, 
artists, and politicians asserting that Ivankov had been successfully rehabilitated. Even the warden of 
his Gulag prison grudgingly acknowledged that Ivankov “is not the worst inmate.” To assure his 
release, the judge handling Ivankov’s case was bribed by Semion Mogilevich, the Budapest-based 
don who has been implicated in laundering billions of dollars through the august Bank of New York; 
other payoffs went to a former Russian minister of internal affairs and an unidentified state 
prosecutor, according to classified FBI reports, U.S. court documents, State Department records, and 
interviews with senior U.S. and European law enforcement sources. 

The campaign succeeded and Ivankov was freed in February 1991. His liberators quickly put him 
to work at their most critical task: to destroy the barbarians at the gate, the Chechen Mafiya invaders. 
Ivankov duly mounted an awesome offensive, employing a brigade composed of hundreds of 
hardened criminals. In typical Ivankov fashion, he went above and beyond the call of duty, wantonly 
massacring rival gangsters. His methods were, as always, cruel. Car bombings rocked the capital, 
casualties mounted, and the bloodbath became so violent that it began frightening away Western 
investors. Ivankov’s excesses were infuriating the very politicians who had helped free him, for 
while stemming the Chechen tide, he had become a liability. “Ivankov had big problems,” says the 
DEA’s Cardenelli. “He had to leave. The Chechens were coming to kill him. Friends in the 
government told him that they wanted an end to the high-profile gangland war.” 

As a result, in early 1992 the Bratsky Krug, or the Circle of Brothers, the ruling council of the 
vors, is said to have ordered Ivankov to “Go to the New Land and invade America!” 



6 


INVASION OF AMERICA 


"V' yacheslav Kirillovich Ivankov’s arrival in America on March 8, 1992, was tantamount to the 
coming of a great white shark. He was met at JFK airport by an Armenian vor who handed him a 
suitcase packed with $1 .5 million in cash. Swiftly setting up offices in Brighton Beach, Ivankov 
recruited two “combat brigades” led by an ex- KGB officer and composed of 250 former athletes and 
Special Forces veterans of the Afghanistan war. He put the combat brigades on a $20,000-a-month 
retainer to kill his enemies, collect tribute from legitimate businesses worldwide, “arbitrate” disputes 
among Russian businessmen, and establish “an international link closely connecting thieves-in-law to 
the United States,” according to a classified FBI document. 

“When Ivankov came into town, I never saw such fear,” remarked a Genovese wiseguy. 

Soon after Ivankov appeared in New York, Alex Zilber, still one of the most powerful forces in 
Brighton Beach, asked one of his Genovese partners to arrange a sit-down with him. The mobster 
offered to have the Italians kill Ivankov, but Alex pleaded with them not to go to war. “I’ll be okay 
here in Brighton Beach,” he said, “but they’ll take me out in Russia [where he had extensive business 
interests]. Let’s pay him.” Ivankov celebrated his new partnership in Rasputin by hosting a lavish 
champagne party there. 

The Old Guard of Russian Jewish gangsters had little choice but to cooperate with Ivankov. He 
was regarded as a prolific moneymaker, and many ranking members of the Brighton Beach mob were 
by then aging, quasi-legitimate businessmen who no longer had the fortitude for an extended gangland 
war. And as the Zilber brothers realized and hit man Moyna Elson soon discovered — resistance was 
futile. The “Streetsweeper” shooting, which precipitated Elson’s flight, “put the fear of God” into the 
Old Guard, commented Elson’s lawyer, James DiPietro. “We were amateurs compared to Ivankov 
and his men,” observed Brighton Beach-based Jewish gangster Vladimir Ginzberg. “We had a 
criminal past, but not so rich like them.” 

Indeed, much of the fear that Ivankov inspired was due to the fact that he came invested with the 
full backing of Moscow’s most powerful crime lords. Made affluent and powerful by the fall of 
communism, their gangs had grown unprecedently large and fierce, and enjoyed a wealth of resources 
in the corrupt former Soviet Union that dwarfed that of even the most significant Russian mob 
operations in the United States. Now, as perestroika bloomed, the Mafiyas based in the former Soviet 
Union began to reach across suddenly unrestricted national boundaries, sending their soldiers and 
bosses like Ivankov out around the globe to either reconnect with or conquer their comrades who had 
emigrated a generation earlier. 

In fact, in the post-perestroika years, thousands of Russian thugs were easily slipping into the 


country. The understaffed and ill-equipped Immigration and Naturalization Service seemed helpless 
to stop them. Ivankov landed in the United States traveling under his own name, with an official 
foreign- travel passport. His visa, good for two weeks, had been obtained directly from the U.S. 
embassy in Moscow. He was sponsored by Manhattan-based shipping magnate Leonard Lev, a fifty- 
eight-year-old emigre who had started his career in time-honored fashion as a master pickpocket in 
Kiev before becoming a partner in Marat Balagula’s gasoline operations and the Odessa restaurant. 

Lev’s Park Avenue company controlled a massive fleet of deepwater ships in Panama, which the 
government suspected of smuggling everything from coke to the latest model Ford Bronco, and of 
obtaining American visas for any number of mafiosi. “Bullshit,” said Lev about the alleged 
smuggling. “I move chicken parts.” If a ship’s captain smuggled contraband, he was completely 
unaware of it, he told me. 

Lev had created a “film” company called Twelve-LA, and wrote the U.S. embassy requesting a 
visa for Ivankov, saying he was a film consultant. Then Lev helped the recently arrived Ivankov enter 
into a sham marriage so he could apply for a green card and, after that, U.S. citizenship. Over drinks 
at the Odessa, Lev introduced Ivankov to an aging Russian lounge singer. She agreed to marry the vor 
for $15,000, getting her first installment from Lev in a cigarette box stuffed with $5,000 in crumpled 
greenbacks. Part of the deal was to get a quickie divorce in the Dominican Republic after Ivankov got 
his Social Security card. 

Ivankov’s criminal domain in the New World rapidly expanded into gambling, prostitution, and 
arms sales, as well as participation in gasoline tax fraud. In Brighton Beach, he had shrewdly placed 
reliable members of the Jewish Organizatsiya s Old Guard like Lev as prime facilitators, using their 
knowledge about the American banking and criminal justice systems to obtain crooked lawyers, 
government contacts, passports, visas, and green cards. 

“Ivankov brings with him the tradition of hard-core Russian criminals’ dedication to their own 
authority and their experience in deception and corruption practiced under Communism,” commented 
a classified FBI report. “While not abandoning extortion, intimidation and murder, Ivankov also 
incorporates more subtle and sophisticated modern methods which enable cooperation with other 
groups, the exploitation of weaknesses in legal and financial procedures, and the use of current 
Eastern European and Eurasian political and economic instability to further his empire.” 

In Miami, Ivankov allegedly took over a hidden share of Porky’s, a strip club where he “was 
shown great homage” by the club’s owner, Ludwig “Tarzan” Fainberg, a Russian crime lord, said 
U.S. intelligence sources, and also entered into a deal to provide heroin and money laundering 
services to the Cali cartel in exchange for cocaine, which was earmarked for Russia. In Denver, he 
obtained a hidden interest in a sprawling Russian restaurant from Vatchagan Petrossov, an Armenian 
vor, who was Ivankov’s international drug adviser, asserts the FBI. Ivankov also bought large parcels 
of real estate in the Rocky Mountains. In Houston, he purchased a used car dealership for money 
laundering. In New Jersey, he met with Russian bankers about possible deals in Thailand, Brazil, and 
Sierra Leone, where he wanted to steal diamonds. Ivankov was fascinated with the complexities of 
Western banking, and listened intently as the bankers explained to him the intricacies of a financial 
instrument known as American depository receipts. In Manhattan, meanwhile, financial wizard Felix 
Komorov became his chief money launderer, according to the FBI. - 

Outside the borders of North America, the cagey vor constantly traversed Europe, the Middle 
East, and Eurasia as restlessly as a nomad, keeping close links to his own formidable organization in 


Russia, which the Circle of Brothers allowed him to maintain. “It seems like I go from meeting to 
meeting, flying around,” he wearily told an associate over a government wire. In the summer of 1994, 
Ivankov presided over two Appalachian- style sit-downs in Tel Aviv with his son Eduard, where 
dozens of gangsters gathered at the plush Dan Hotel to discuss their investments in the Jewish state, 
according to U.S. and Israeli intelligence sources. During his global travels he also recruited the most 
intelligent, ruthless, and boldest young Russian criminals for his U.S. operations. Wooing them with 
promises of the “good life,” according to a classified FBI report, he opened bank accounts for them 
and provided credit cards and automobiles for their use. Ivankov himself “seems always able to 
reenter the United States undetected after each trip,” declared an FBI report. 

Ivankov also reinforced old relationships with leaders of various Eurasian criminal underworld 
groups, such as the Budapest-based Mogilevich organization and the Solnt-sevskaya family, 
Moscow’s mightiest criminal enterprise, which had more than 1,700 members. Its neighborhood 
stronghold in the suburbs of southern Moscow was where the communists released criminals when 
they were freed from the Gulag. These hoodlums and their offspring grew into tough mob leaders who 
flourished during perestroika when they seized more than eighty commercial companies, prime real 
estate, hotels, and other property. The Solntsevskaya organization is divided into ten- to twelve- 
member combat brigades, which are headed by criminal avoritets. Each unit controls assigned banks 
and business concerns in Moscow and the suburbs. At the same time, the group has a shared fund, or 
an obshchak, to which all brigades allocate money on a regular basis. When friction arises, members 
of several brigades come together to negotiate. 

With other crime groups, however, Ivankov battled for territory. He was particularly determined 
to dominate the nascent Russian trade in cocaine, a drug that had quickly soared in popularity among 
the nation’s nouveaux riches. Two Russian criminals stood in his way. One was the Georgian vor 
Valeri “Globus” Glugech, the first gangster to set up large-scale drug importation to Moscow from 
suppliers in the United States, a venture that made him a wealthy man. Ivankov invited Globus to visit 
the United States in early 1 993 and “offered” to buy out his operation, a proposal Globus refused. In 
March 1993, Globus was shot to death by a sniper outside a discotheque he owned in Moscow. Three 
days later, his principal lieutenant, Anatoly Semionov, was gunned down in front of his Moscow 
apartment. Two weeks after that, another top aide, Vladislav Wanner, was killed at an open-air gun 
range in Moscow. At a May 1994 sit-down in Vienna, the heads of several Russian organized crime 
groups officially awarded Ivankov the remnants of Globus’s drug business. 

The next Russian drug kingpin to fall was Elson’s friend Sergei “Sylvester” Timofeyev, who 
directed his mob’s activities from Cyprus. Timofeyev and Ivankov had had a long-standing beef. 
Ivankov had an illegitimate son, Viktor Nikiforov, also known as Kalina, who had become a thief- in- 
law and a powerful figure in the Moscow underworld while his father was in prison. Just before 
Ivankov was released, Kalina was murdered. Most underworld figures believed Sylvester had 
ordered the hit, although no one could prove it. 

Typically, however, Russian gangsters do not let their personal animosities stand in the way of 
their business, and the two men continued to make deals. In July 1994, Sylvester and Ivankov 
completed a drug transaction, after which Sylvester complained that he had been shortchanged by 
$300,000. A few weeks later Sylvester traveled to New York to work out the dispute with Ivankov. 
The meeting ended with the two cursing and shouting at each other, Ivankov accusing Timofeyev of 
having murdered Kalina, as well as assassinating his friend Otari Kvantrishvili outside a Moscow 



bathhouse. One month after the altercation, Sylvester was blown apart in Moscow by a car bomb 
placed in his Mercedes, and he had to be identified by his dental records. 

Ivankov also nurtured his high-level contacts with corrupt Russian government leaders, as well as 
with former leaders of Russian intelligence and military services. He employed high-profile former 
foreign government officials as his international “diplomats.” One such figure was Tofik Azimov, the 
former principal representative of the Republic of Azerbaijan to the European Economic Community. 
Azimov was handpicked by Ivankov to provide a “legitimate” front for Atkom, a “consulting firm” 
that allegedly laundered tens of millions of dollars out of a $10,000-a-month office suite in Vienna. 
The city is popular with Russian mobsters because of its strict banking secrecy laws, its three-hour 
flight time from Moscow, and its abundance of corrupt state bureaucrats. The money laundering 
operation was, in fact, directed by Ivankov’s son Eduard, who “conducts a wide array of financial 
and banking transactions throughout Central and Western Europe (including England) in an effort to 
launder proceeds of Ivankov’s illegal activities,” according to the FBI. Atkom employed two female 
secretaries, a former member of the Austrian Special Forces who worked as an armed bodyguard, 
and a Russian emigrant and an Austrian citizen who did nothing but process banking transactions and 
money transfers, according to a classified Austrian police document. Azimov came in handy when 
two Solntsevskaya crime lords had to leave Russia because of attempts on their lives; it was he who 
arranged for the mobsters’ visas through Atkom As stunned FBI officials later learned, the Russian 
gangsters were even welcomed into the country by Vie nne se police officers with gifts of 
semiautomatic Glock pistols “for self-defense.” 

Within just a year after he arrived in the “New Land,” Ivankov had succeeded in extending his 
insidious i nfl uence from Austria to Denver to the icy Baltic republics. His organization was 
visionary, well managed, efficient, wealthy, merciless, and expanding. He muscled into Russia’s oil, 
aluminum, and arms businesses. Tens of millions of dollars of illicit proceeds was laundered through 
the U.S. banking system He frequently used front companies, through cooperation or extortion, to 
facilitate money laundering and the sponsorship of “business associates” for visas to enter the United 
States. It was said by his associates that he could provide millions of dollars in credit to finance a 
deal with a single phone call. His vast power was “propelled by a network of influential contacts and 
seemingly unlimited funds,” said a classified FBI report. “Ivankov is a shrewd and respected leader 
over a group of ruthless members knowledgeable in business, financial, legal, and government 
operations. In addition to extortion, money laundering, drug trafficking, Ivankov is suspected of not 
only arranging numerous murders but bragging about them” 

By January 1995, Ivankov and the Russian mob had grown so bold that they even convened a 
summit in the U.S. commonwealth of Puerto Rico, at the San Juan Hotel and Casino. Shortly before 
the rendezvous, Toronto-based Russian crime figure Joseph Sigalov was overheard on a Royal 
Canadian Mounted Police wiretap boasting that he was going to Puerto Rico “with Yaponchick 
[Ivankov] ... to discuss who we will kill, fuck!” Known by his gangland friends as Mr. Tomato 
because of his oversized head, Sigalov was the publisher of Exodus, an influential Orthodox Jewish 
newspaper in Toronto sponsored by the Chabad movement, which was active in resettling Russian 
Jewish refugees. Sigalov also owned a bakery and was a venture capitalist. 

Robert Kaplan, Canada’s solicitor general in charge of the Royal Canadian Mounted Police and 
the Canadian Security Intelligence Service (the nation’s CIA) from 1980 to 1984, and a member of 
Parliament for twenty-five years until he stepped down in 1993, was Sigalov’s business adviser for 



thirteen months beginning sometime in 1994. Kaplan said that charges that Sigalov was a mobster 
were “ridiculous. . . and hard to believe. ... It was never an issue for me while I was working for 
him. . . because there was nothing reported about it then or said about it. No one in the community said 
this is someone to stay away from and no one did say that. He was very active in the Russian Jewish 
community in Toronto, which was rapidly growing,” adding that Sigalov helped the emigres join 
synagogues and rediscover their religion. 

But Sigalov’s good deeds and legitimate business affairs were little more than a cover for 
international heroin smuggling, arms trafficking, and extortion. In one incident, Ivankov ordered 
Sigalov and Vyacheslav Sliva, the godfather of Russian organized crime in Canada, to have their 
henchmen visit the mayor of Kharkov in Ukraine. The thugs not only strong-armed the mayor into 
paying protection money to operate the city- run casino, but for good measure also took over control of 
Ukraine’s state- sponsored lottery, according to the RCMP. 

Sigalov and Ivankov were joined at the Puerto Rican con-calve by the elite of the Russian 
underworld: along with Joseph Kobzon and mob leaders from Georgia, St. Petersburg, Miami, and 
Brighton Beach were Viktor Averin and Sergei Mikhailov, heads of the Solntsevskaya organization. 
Although the Puerto Rican meeting was supposed to be a discussion about “who we will kill, fuck,” 
the mob bosses seized the occasion to express their ire at Ivankov. They were incensed over his 
reckless behavior, accusing him of gratuitously murdering dozens of Russian cops, customs officers, 
and tax police in his unbridled quest to dominate Russia’s drug trade. The violence was attracting too 
much attention from the law and ruining everybody’s business, they complained. When they patiently 
tried to work out an equitable division of the drug spoils, an implacable Ivankov simply refused. 
Miraculously, the mobsters did manage to agree on several mutually beneficial rubouts without a 
quarrel. 

Not surprisingly, Kobzon offered a far different version of the events in Puerto Rico to a Russian 
newspaper. He claimed that he had traveled to the Caribbean to enjoy an old-fashioned vacation with 
several family members and close friends, including Valery Weinberg, publisher of the Manhattan- 
based Novoye Russkoye Slovo, the largest and most influential Russian-language daily newspaper in 
America. With a circulation of some 1 80,000, it reaches nearly every Russian emigre home in New 
York, Pennsylvania, New Jersey, and Connecticut, where more than 300,000 now live. The paper is 
unique among the dozens of Russian publications in America for its routine glorification of the 
Russian mob and its vilification of U.S. law enforcement, especially the FBI, further contributing to 
the alienation of an emigre group that has bountiful enough reasons to suspect authority. The paper’s 
editorial slant has helped to keep the emigre community insular and suspicious. Nevertheless, in 
March 1999, Weinberg received the prestigious “outstanding leadership” award for his work on 
behalf of Soviet Jewry from the UJA-Federation, a large, nationwide Jewish philanthropic 
organization. Weinberg’s wife, Lilly, is the UJA’s New York Russian division chairwoman. The 
awards dinner was held at Manhattan’s luxurious Plaza Hotel and the featured speaker was Senator 
Charles Schumer, the junior Democratic senator from New York, who said that “as you better 
yourselves, you better America. Those who say you should close the doors to immigration should 
come into this ballroom” The ballroom included Weinberg’s friends, some of whom have used 
business success and philanthropy to, in effect, launder their questionable pasts, and rub shoulders 
with the unwitting elite of the American Jewish community. 

Weinberg’s philanthropy extended to writing character references for Kobzon after the United 



States State Department revoked Kobzon’s visa and banned him from entering the country in June 
1995 because of his Mafiya ties. Although Weinberg says he never met Ivankov or any other mobster 
while vacationing in Puerto Rico, Kobzon recalled socializing with the engaging vor. “When he 
recited [Russian poet Sergei] Yesenin by heart, I thought, ‘well, this is a swell guy.’” - 

“We spent a wonderful time with our families,” Kobzon went on. “I have a photograph where we 
are all together in Puerto Rico,” recounted the singer, who favors pancake makeup, eyeliner, and a 
thick black toupee shaped into a pompadour. “We spent days on the beach. In the evenings we 
relaxed. We had a daily regimen. We went to restaurants — then to the casino. . . . This was all in one 
hotel. And that’s how it lasted for several days straight. Then Slava Fetisov [the former NHL 
superstar and now a coach for the New Jersey Devils] came to see us for two days. Then Anzor 
Kikalishvili [who succeeded Otari Kvantrishvili as president of the mobbed-up Twenty First Century 
Association, which helped Ivankov win his early release from the Gulag] called from Miami and 
said: ‘Guys, it’s very dull here. How is it where you are? Can I join you for a day?’ 

“’Come, Come.’ So he came for a day.” 

FBI agents monitoring the summit loitered around the hotel wearing paisley shirts, trying to look 
inconspicuous, and filming as much as they could from behind potted plants. After the Russians 
departed, agents scoured Kobzon’s hotel room for incriminating evidence and retrieved a matchbook 
in a wastepaper basket with Ivankov’s name and Brooklyn phone number on it. They also discovered 
that calls had been placed to Ivankov’s cell phone from Kobzon’s hotel room. - 

This is what the FBI was reduced to. Scrounging around Kobzon’s room, looking for clues, and 
picking up matchbooks out of garbage cans. The FBI had inaugurated its Russian organized crime unit 
only some eight months earlier. Already playing a bad game of catch-up, it was ill prepared for the 
tidal wave of Russian criminals unleashed on the world by the dissolution of the Soviet Union. Apart 
from what it learned from a few scattered prosecutions, the bureau was still largely in the dark about 
how this new Red Menace operated, who controlled it, and steps that might be taken to stop it. The 
FBI did realize, however, that it had to act fast. 

Unfortunately, the chronically turf-jealous FBI barely cooperated with the government’s other 
investigative bodies who were also investigating the Russians, such as the INS, the IRS, and the 
DEA. To make matters worse, local police forces were kept almost completely in the dark. (In 1999, 
relations between the influential FBI office in New York and the Manhattan district attorney’s office 
— which were conducting separate investigations into money laundering charges at the Bank of New 
York by the Russian mob — became so hostile that the bureau announced that any agency that got in its 
way would be slammed with obstruction-of-justice charges, according to the New York Times.) The 
FBI preferred to operate independently, poring over wiretap transcripts of suspected mobsters, tailing 
suspects, recruiting informants, and generally trying to gather intelligence on the burgeoning Russian 
Mafiya. 

Despite Ivankov’s flagrant, multinational criminal activities, during his first years in America, the 
FBI had a hard time even locating him “At first all we had was a name,” says the FBI’s James 
Moody. “We were looking around, looking around, looking around, and had to go out and really beat 
the bushes. And then we found out that he was in a luxury condo in Trump Towers” in Manhattan. - 
But almost as soon as they found him, he disappeared again leaving nothing but vapor trails for the 
FBI to follow. “Ivankov,” explained an FBI agent, “didn’t come from a walk-and-talk culture,” like 
Italian gangsters who take walks to discuss family business so they can’t be bugged or overheard by 


the bureau. “As soon as he’d sniff out the feds, he’d go into hiding for days at a time,” a trait that 
made him harder to keep tabs on than Italian mobsters. 

“He was like a ghost to the FBI,” says Gregory Stasiuk, the New York State Organized Crime Task 
Force special investigator. Stasiuk picked up Ivankov’s trail at the Taj Mahal in Atlantic City, the 
Trump-owned casino that the real estate magnate boasted was the “eighth wonder of the world.” The 
Taj Mahal had become the Russian mob’s favorite East Coast destination. As with other high rollers, 
scores of Russian hoodlums received “comps” for up to $100,000 a visit for free food, rooms, 
champagne, cartons of cigarettes, entertainment, and transportation in stretch limos and helicopters. 
“As long as these guys attract a lot of money or spend a lot of money, the casinos don’t care,” a 
federal agent asserted. Russian mobsters like Ivankov proved a windfall for the casinos, since they 
often lost hundreds of thousands of dollars a night in the “High- Roller Pit,” sometimes betting more 
than $5,000 on a single hand of blackjack. “They’re degenerate gamblers,” says Stasiuk. Although the 
FBI still couldn’t find Ivankov, Stasiuk managed to tail him from the Taj Mahal to shipping mogul 
Leonard Lev’s sprawling home on a dead-end street in Far Rockaway, Queens, and on another 
occasion, from the Taj to the Paradise Club, a notorious Russian mob haunt in Sheepshead Bay, 
Brooklyn, then managed by godfather Marat Balagula’s youngest daughter, Aksana, the onetime 
aspiring optometrist. 

So wily did Ivankov prove to be that the FBI couldn’t gather enough evidence against him to 
convince a federal judge to grant a wiretap. The Canadian Mounties eventually came to the bureau’s 
aid, for they had recorded numerous conversations between Sliva and Ivankov plotting various 
crimes. The grateful feds used the recordings to win a court- authorized wiretap to listen in on his 
multiple telephones, which provided the fullest picture yet of the vor s world. 

In one monitored phone conversation, Ivankov was barely able to conceal his rage when a 
colleague in Russia described how several mob associates were shot to death in an ambush in 
downtown Moscow by a rival gang. In another transatlantic call, an accomplice told Ivankov that two 
deputy mayors in Moscow who were on Ivankov’s payroll were becoming too independent-minded. 
“They are trying to get involved in politics and they are fucking wanting to get rid of us,” complained 
Ivankov’s comrade. “These people are our tribe.” 

“I’m trying to solve the problem with the deputy mayor,” Ivankov brusquely replied. 

In another call, an underworld confidant told Ivankov that he had an Israeli gangster “beaten 
severely” for trying to cheat him on a diamond deal. 

“It’s not enough just to beat him. . . this fucking animal,” Ivankov growled. 

When Ivankov learned that a piece of property in Russia he had coveted was taken over by a rival 
mob, he screamed, “No fucking way! I’ll fuck them all, the living and the dead!” 

Ivankov had many prosaic conversations about the philosophy of the vors with Moucheg (aka 
Misha) Azatian, an imposing enforcer type who lived in Los Angeles. The code of the vor — which 
Ivankov called “human law” — was pure, honest, and uncorrupted by politics. He ridiculed the 
political pretensions that were the foundation of perestroika, declaring that it was merely a cynical 
plot devised by the ruling class to control the populace. After perestroika “they’ll invent something 
different, again and again, and this is an endless process,” he told Misha. “But in any case, everything 
is fine, brother. We live according to human law. And according to the law of our mini-state, 
everything is done in an honorable and honest way. And that’s it.” 

“Of course, brother,” Misha replied. “There is nothing better than human law, and that’s the only 



important thing in the world.” 

“Of course, conscience and honor — that’s the only law we keep,” Ivankov reminded him. 

The FBI got particularly lucky in the autumn of 1994 when Bank Chara in Moscow collapsed 
under suspicious circumstances, costing its depositors more than $30 million. Some $3.5 million of 
the money had been invested in Summit International, a New York investment house that had been 
founded by two of Chara’s Russian board members, Alexander Vilkov and Vladimir Viloshin. The 
Summit executives were no strangers to organized crime, Vilkov, Summit’s president, is a thin, wiry, 
chain-smoking ex- KGB officer with a noxious temper, Viloshin, Summit’s VP, is a member of the 
Lyubertskaya crime family in Moscow, where he had once mixed up a target’s address and torched 
the wrong apartment, as well as its female inhabitant. Their unlicensed Wall Street investment firm 
was actually a giant Ponzi scheme, preying mostly on Russian emigres who were promised up to 120 
percent per annum returns on phony companies with names like “Silicon Walley.” To cover itself in a 
cloak of fiscal respectability, Summit entered into a contract with Prudential Securities vice president 
Ronald Doria to serve as its financial adviser. (Doria was later terminated by Prudential, and took the 
Fifth, refusing to testify, during a National Association of Securities Dealers arbitration hearing.) 
Between 1 993 and 1 995, Vilkov and Viloshin took in $8 million from investors, spending nearly the 
entire sum on their own lavish entertainment: beautiful women, long weekends in the Caribbean, and 
gambling junkets to Atlantic City. In one night alone, Viloshin lost $100,000 at Bally’s Hotel; he 
covered it with his investors’ money. 

In the spring of 1995 Bank Chara’s new president, Roustam Sadykov, flew to New York to ask 
Summit’s directors to return the bank’s missing funds. When the men refused, Sadykov turned to 
Ivankov to collect the debt. “This should be fairly simple,” Ivankov told an accomplice over a 
government wire. “If you call the men and use my name that makes people do what they are supposed 
to do.” When Ivankov and two henchmen paid a visit to Summit’s Wall Street offices, Vilkov and 
Voloshin fled in terror to Miami. But Ivankov’s men caught up with them when they returned to 
Manhattan, kidnapping them at gunpoint from the bar of the Hilton Hotel and forcing them to sign a 
contract promising to pay one of Ivankov’s associates $3.5 million. “You understand who you are 
dealing with?” snarled Ivankov to the Summit officials. As an inducement to honor their commitment, 
Viloshin’ s father was stomped to death in a Moscow train station. 

Unbeknownst to Ivankov, however, the pair had informed the FBI of the extortion. Voloshin had 
initially flown to San Francisco to implore members of the Moscow-based Lyubertskaya crime 
family, which had a modest contingent in California, to help him rid himself of Ivankov, but when they 
declined, Viloshin and Vilkov were left with the FBI as their only recourse. 

On the morning of June 8, 1995, a squad of FBI agents yanked a sleepy-eyed Ivankov from his 
mistress’s bed in Brighton Beach. They found a gun in the bushes outside the apartment and $75,000 
in cash on the kitchen table. One of the documents that was seized contained the name of a Russian 
banker who was hiding in the United States with his wife and children. Although the FBI would have 
preferred to arrest Ivankov on bigger charges, and had been trying to gather evidence to assemble a 
racketeering case against him, they had no choice but to arrest him for extortion before he could kill 
the Russian bankers. As he was being led into the FBI building, a defiant Ivankov kicked and spit at 
reporters. “I eat my enemies for dinner,” he sneered. 

Ivankov might actually have avoided conviction had he shown his six co-defendants that same 
degree of loyalty he demanded from them. Incarcerated at the Manhattan Correctional Center awaiting 



trial with his underlings, Ivankov tried to bully them, dictating which attorneys they should hire, and 
instructing them how to subordinate their defense strategy to his. He warned that anyone who did not 
follow his orders would be his “enemy for life.” 

Still, there were rebellions. One day, Ivankov and his cohorts gathered in a tobacco-filled day 
room at MCC to figure out how to spin incriminating wiretap conversations. According to FBI 
interviews with Ivankov’s gang, Yakov “Billy Bombs” Yfrovnik, a nervous cokehead, who had a 
prior conviction for his role in a Russian mob jewelry theft ring, pleaded with Ivankov for funds to 
hire a decent attorney. Ivankov refused, ordering him to get the money from Leonid Abelis, the man 
who had been in charge of the day-to-day operations of the extortion plot. 

“I have no money to spare,” complained the six-foot, 220-pound, thirty-seven-year-old Abelis, a 
former machinist in Russia. “I’m paying for my own lawyer. I have my own family to think about.” 

“What, I do not have a family?” Ivankov angrily replied. 

When the hulking Abelis started to rise from his chair, the 150-pound, five-foot- four-inch, fifty- 
seven-year-old vor grabbed him by the shoulders and growled, “Sit down, you whore! I will settle 
everything with you shitheads!” 

Billy Bombs pulled the men apart, warning them not to quarrel in prison where they were 
undoubtedly under surveillance. 

Ivankov spared no expense for his own defense, hiring Barry Slotnick for a sum of $750,000. The 
fee was underwritten by the sale of property in upstate New York owned by shipping magnate 
Leonard Lev; the proceeds were routed through a company in Monrovia, Liberia, according to a U.S. 
Customs agent. (Lev denies that he had anything to do with the defense costs and, in fact, didn’t even 
control the property at that time.) Whatever the case, Ivankov left his co-defendants to fend for 
themselves. But Abelis — who had fought with Ivankov over money — believed that he was being set 
up by Slotnick and Ivankov as the fall guy, and turned state’s evidence. Billy Bombs Volovnik quickly 
followed suit. 

Still, the government’s case had holes. Ivankov had carefully insulated himself by generally 
staying on the sidelines while his henchmen made the extortion threats, invoking his name to induce 
terror. Furthermore, the Summit executives scarcely fit the role of sympathetic victims. Not only had 
they stolen millions of dollars from their Russian- American clients, but according to court testimony, 
they had also taken more than $30 million from Russian banks before coming to America. 

Slotnick, who had just concluded a long mental competency hearing for his client Genovese crime 
boss Vincent Gigante, seemed unprepared during the crucial opening stages of Ivankov’s trial. He 
unconvincingly tried to portray the Russian godfather as a kind of Robin Hood who was guilty of 
nothing more than defending Bank Chara from greedy career criminals. Indeed, Slotnick argued, 
Ivankov was a Russian national hero who had been defying communism since grade school, spending 
half his life in the Gulag rather than being forced to sing the “Internationale.” 

But Abelis ’s testimony proved devastating. Not only did he establish Ivankov as the mastermind of 
the Summit extortion, but for good measure, he described Ivankov’s shakedown of the Rasputin 
nightclub. After a five-week trial, the jury took just three hours to convict Ivankov and his associates 
of extortion, \bloshin and \blkov went into the Federal Witness Protection Program. In a subsequent 
trial, Ivankov and Leonard Lev were convicted for conspiring to arrange the sham marriage that 
allowed Ivankov to stay in the United States. 

At the sentencing for the second case, Slotnick’s partner, Jay Shapiro, compared Ivankov to Soviet 



Jewish refuseniks, Jews in Nazi Germany, and Alexander Solzhenitsyn. (“To use his [Ivankov’s] name 
in the same sentence as Solzhenitsyn is a sacrilege,” the FBI’s Raymond Kerr later remarked.) 

Ivankov was nevertheless smacked with a nine-and-a-half-year jail term for the two convictions. “Let 
them put me on the chopping block — let them crucify me on a cross,” snarled Ivankov. “I’m tough. I 
will survive!” 

In many respects, Ivankov does survive. Not only did he pave the way for the Russian Mafiya s 
second wave to invade America, putting in place a significant web of businesses and criminal 
relationships, a legacy that could later be exploited by other mobsters, but, according to several North 
American law enforcement agencies and Italian crime bosses, Ivankov continued to run a 
sophisticated crime empire from the federal prison in Lewisburg, giving orders in ancient dialects 
like Assyrian and using criminal codes the FBI has yet to master. “The FBI, the MVD, the FSB [the 
former KGB] have stolen my life from me,” he told a Russian newspaper. “I have a list of who 
committed these crimes — both on the side of Russia and on the side of the FBI. ... I know who all 
these people are. And I warn them that they will answer for their crimes.” 

In the winter of 1999, Ivankov was found with heroin in his cell and traces of the narcotic were 
detected in his urine. He was transferred to a maximum- security wing at Allenwood Federal 
Penitentiary. 



7 


TAR/. AN 


In the middle of Miami’s shabby warehouse district near Hialeah Race Track stood a squat, 
windowless one- story building. As its name implied, Porky’s was a strip club, though it was much 
seedier than its namesake in the movie of the same title. In its dimly lit corridors, working-class 
Cuban men from the nearby rough-and-tumble neighborhoods pawed topless dancers, or received 
jiffy blow jobs for a few dollars a pop. In a filthy, dungeonlike office, away from the ear-splitting 
disco music and the smoky bar where strippers solicited lap dances, Rocky, the forty-two-year-old 
day manager, remembered better days, when Porky’s was run by a brawny Russian gangster known as 
Tarzan. “Ivankov was here surrounded by three goons,” Rocky told me. “I saw Ivankov with my own 
eyes. Did Ivankov and Tarzan know each other? Oh, yeah! Did they do business together? No 
question. The Russian mob came in all the time.” 

Porky’s was once a howling, hedonistic beacon for Russian wiseguys from Tashkent to Brighton 
Beach. Gangsters craving sultry young, $l,000-a-night Eurasian prostitutes, Colombian cocaine, and 
Soviet-era weapons knew Porky’s was the place to come to. Recreational drugs, bootlegged boxes of 
Philip Morris cigarettes, and stolen bottles of ice-cold Stolichnaya vodka could be procured just as 
easily. The club was abuzz with so much Russian mob activity that even local policemen jokingly 
referred to it as Redfellas South. 

Rocky pointed out a memento from Tarzan’s glory days: a framed photo of the club’s most famous 
stripper, mega porn star Amber Lynn, who charged $25,000 a week to perform. “The regular dancers 
[at Porky’s] didn’t get paid,” said Rocky, who was once a bodyguard for one of the biggest 
Colombian drug lords in Florida and had emptied a thirty-round Mac- 10 clip into a nightclub during a 
gangland dispute. “They worked on tip money, much of which I suspect was kicked back to Tarzan.” 
Adorning the wall was also a promotional flyer for Porky’s fourth anniversary party, featuring a photo 
montage of Tarzan fondling a series of exotic dancers. In one shot, he leered directly into the camera, 
while two big- haired, blond strippers pressed their enormous bosoms into each side of his face. 
Rocky said the flyer used to hang in the office next to a photo of Tarzan’s fouryear-old daughter. 
“Tarzan doesn’t care about anyone except himself. He has no loyalty to anyone. One night he cut the 
commissions the girls get on drinks. They went ballistic. I said, ‘Wait till the end of the shift. They are 
threatening to go on strike.’ He backed off. I said, ‘Why do you always have to screw everything up?’ 
He was a piece of shit!” 

On a September day at the tail end of Hurricane Floyd, when rain was still soaking the blacktops, 


I took a taxi to the Federal Detention Center in downtown Miami to interview Tarzan. His real name 
is Ludwig Fainberg, and he was, until the feds nabbed him, the flamboyant ringleader of the South 
Florida Russian mob. When I got to the prison, the guards relieved me of my passport, my keys, and a 
pack of chewing gum. “It’ll cost us $2,000 to unjam a lock from that gum if an inmate gets ahold of 
it,” I was told by way of explanation. After passing through a metal detector and two machines that 
monitored my hand, which had been coded with incandescent ink, I was led to a large, open 
rectangular room where prisoners in gray jumpsuits silently waited for their lawyers and guests. 

In a glass-walled cubicle at the back of the room, I spotted Tarzan, a huffy, thirty-eight-year-old 
man with a grim glare, slumped over a brown Formica table. He used to have wild, acid-rock-size 
hair, but it was shorn now; he once took pride in a steroid-enhanced, muscular physique, but when I 
saw him he looked like a deflated inner tube. He slammed a thick document down on the table. It was 
his indictment, and it was a heavy load. Conspiracy to distribute cocaine and heroin. Weapons 
trafficking. “It says, ‘The U.S.A. vs. Ludwig Fainberg,’” he griped. “Who can fight the U.S. 
government?” He sounded like an adolescent. “I already spent a million dollars on lawyers,” he said. 

Tarzan first became conspicious in Miami in the early 1990s. He had all the makings of a 
successful mobster: he was greedy (he held numerous fund-raisers for various charities and the state 
of Israel, pocketing 85 cents of every dollar, according to the DEA; Tarzan is adamant that he never 
stole from Jewish charities); he was ruthless (he once forced a woman to eat gravel); and he was 
ambitious (he once brokered a complicated negotiation involving the transfer of a Russian military 
submarine to Colombian narcotraffickers). 

In Russia, Tarzan told me, dishonesty is a trait that’s bred in the womb. Deprivation teaches 
Russians to be cunning predators — it’s the only way to survive, he said. Americans, on the other hand, 
are trusting souls. Their rules, Tarzan figured, were made to be broken. 

Ludwig Fainberg was born in Odessa in 1 958. When he was three, his family moved to 
Chernovtsi, a small city in western Ukraine. He sang in a national boys choir, and was trained in a 
boxing program set up by the Soviet military. “When I was a kid everything that I did made people 
laugh,” he said. His inspiration was a Soviet comedy team that was similar in style to that of the 
Three Stooges. His stepfather, who manufactured Persian rugs and thick fur hats for a Soviet factory, 
was a dealer on the burgeoning black market. He’d trade rugs and fur caps for choice cuts of meat, 
some of which he’d barter for hard-to-get items, such as theater tickets. Then he’d trade the tickets for 
something more valuable — fresh vegetables. 

One day in 1972, when Ludwig was thirteen, his parents announced that they were moving the 
family to Israel, where they hoped to increase their already considerable wealth. Ludwig, who had 
never known the family to identify with Judaism in any way, was confused. “Jew” was just something 
stamped on their passport, he thought, signifying their ethnic group. To him, being Jewish simply 
meant having certain privileges. “Jews were the richest people in town,” he told me. “Jews had cars, 
Jews had money, Jews lived in nice apartments. We were comfortable. My mother had nice clothes 
and jewelry. We took a vacation once a year to Odessa, a stunning city with a boardwalk and 
gorgeous beaches. It was filled with mobsters and entertainers. It was a city with a Jewish flavor.” 

In Russia refuseniks — Jews who had denounced communism and were denied an exit visa — were 
sometimes accorded a touch of grudging respect. But in many cases Jews like the Fainbergs, who left 
for economic reasons, were despised. When Ludwig’s teachers learned that he was moving to Israel, 



he was forced to stand in front of the six-hundred-member student body and denounced as a traitor. 

On the way home, he says, he was beaten by classmates. “Why do we have to be Jewish,” Tarzan 
cried to his parents. 

Before leaving, the Fainbergs converted their money into gold and diamonds, stashing some in 
shoes with false bottoms and hiding the rest in secret compartments of specially built tables and 
chairs, which they shipped to Israel. There, Ludwig lived on a kibbutz. According to his friends, 
that’s where he got his nickname — he bestowed it upon himself after jumping off the fourth floor of a 
building to attract attention. 

Tarzan, who soon stood at six feet one, joined the Israeli navy and applied to the elite Navy 
SEALS commando unit. But he washed out during basic training, and served the remaining three years 
of his service in the main weapons room of a destroyer. He wanted to be an officer but failed the 
exam “I did not have enough brains,” he told a reporter. “It was a very difficult exam” 

In 1980, a restless Tarzan moved to East Berlin. He had one Russian friend in the city who had 
official-looking medical diplomas — just one of the many varieties of forged documents the Russian 
mob had for sale. The friend asked Tarzan if he wanted to be a doctor, too. “Are you crazy?” Tarzan 
said incredulously. “Do you think I want to kill patients?” He settled for a dental technician’s license, 
but his gross incompetence got him fired from seven jobs in a row. 

Like many young Russian emigres in East Berlin, Tarzan joined a mob crew. He specialized in 
credit card fraud and counterfeiting. Then the brawny lad decided to try his hand at extortion. Working 
for a mob group run by the notorious Efim Laskin — who had sold weapons to the Red Brigades — 
Tarzan was ordered to nab a German banker. Tarzan and two accomplices accosted the banker as he 
ate lunch at an expensive restaurant and forced him into the trunk of their car. But when the man swore 
he could get no money until his bank opened after its lunch break, the hapless extortionists agreed to 
release him, and arranged to meet him at the bank at four o’clock. Moments before the rendezvous, 
Tarzan stepped out of the car and walked to a nearby pillar for a smoke. Suddenly, a group of rival 
gangsters in four Mercedes-Benzes pulled up in front of the bank and beat his accomplices severely. 

A terrified Tarzan fled all the way to Brighton Beach. 

Tarzan found Brighton Beach to be an unsavory haunt for murderers and thieves. “It was the Wild 
West,” he recalled. “I took my gun everywhere.” His fortunes improved markedly when, soon after 
arriving in Brooklyn, he married Maria Raichel, a wastrel Russian Mafiya princess. Her grandfather, 
her ex-husband, and her brother-in-law were all known by the same sobriquet — Psyk — the Russian 
word for “psycho.” Her grandfather earned the name after he cold-bloodedly stabbed a man to death 
in Russia. Her first husband, Semion, and his brother Naum eventually became big-time extortionists, 
and ran their own crew; but because of their irrational behavior they were shunned by other Russian 
gangsters. Semion, for instance, threw a Ukrainian prostitute into a bathtub and threatened to toss in an 
electric appliance until she promised him a share of her earnings. Then, for good measure, he forced 
her to give him a blow job. The woman subsequently told her tale to the cops and Semion was 
arrested. A few days later, she received a long-distance phone call from a deep-throated man who 
told her that someone wanted to speak to her. “Mommy, Mommy, Mommy, they will kill me!” a voice 
cried. It was the woman’s three-year-old child, who was living with relatives in Ukraine. The woman 
dropped the charges. “He’s an evil, horrible person,” says a New York City detective who worked on 
the case. 



Although Tarzan had married into mob royalty, the relationship had its downside. Maria wanted 
him to live off the fortune left behind by Semion, who was serving a seven-year prison sentence in 
Germany for extortion. She bought Tarzan $3,000 tuxedoes for nights on the town, and expected him to 
stay home and watch game shows. He felt like a sissy and found refuge in the criminal exploits of 
Grecia Roizes. Their families had been close friends in Chernovtsi, and later in Israel. In Russia, 
Roizes had spent three years in a prison in Siberia for hitting someone so hard in the stomach that his 
guts came through a recent medical incision. Now he headed one of the most feared Russian crews in 
Brighton Beach and owned a wholesale furniture store with branches in Coney Island, Italy, and 
Russia. (The DEA and a knowledgeable figure in the Genovese underworld say that the store fronted 
a heroin business that involved the Gambinos, the Genoveses, and a host of Russian mobsters.) 

Tarzan helped Roizes’s crew with torch jobs and extortion, and soon developed an interest in 
furniture. After a young couple in Bensonhurst, Brooklyn, refused to sell their wholesale furniture 
store to Roizes for a fire sale price, they permanently disappeared. Tarzan claims that he was shocked 
when they vanished, but he happily took over their business. 

Inevitably, the Russian mobsters crossed paths with their Italian counterparts. By intuition, or 
perhaps a sure knowledge of the territory, this happened to Tarzan on a day when an old woman 
walked into his new store and asked to buy a cheap bedroom set on credit. “This ain’t a bank, lady,” a 
clerk named Vi nny curtly replied. Tarzan overheard the conversation and gave her the set for free. He 
even loaded it on his truck and drove it to her house. Tarzan said that he felt sorry for her, and that 
besides, he liked catering to old people and “kibitzing” with them. 

The following day, a powerfully built Italian man sauntered into a video store that Tarzan ran and 
introduced himself only as Frankie. “I’m the son of the old woman,” he said, offering Tarzan coffee 
and pastries. “I owe you. Anything you want is yours.” 

Tarzan says he was awestruck. “You could feel his power,” he recalled. “He was the kind of man 
who wouldn’t take no for an answer.” 

Over the next few years, if the rent at Tarzan’s video store was raised by the landlord, he’d call 
his friend Frankie, and it would be taken care of. When an Italian extortionist tried to shake down 
Tarzan, Frankie’s boys had him pistol -whipped in front of his wife. “They are going to find you in a 
car cut in little pieces,” the wife shrieked at Tarzan. 

Tarzan claimed he never knew the identity of his Italian patron until one day in 1987, when he saw 
a picture of him in the tabloids. The papers identified him as the late Frank Santora, a notable in the 
Colombo organized crime family, and reported that he had been shot twice at close range outside a 
dry-cleaning store on a quiet Brooklyn street. 

Soon, many of Tarzan’s friends were coming to grief: Vladimir Reznikov, one of Brighton Beach’s 
most successful professional killers, was shot to death in front of Marat Balagula’s popular restaurant 
and nightclub Odessa. Then Tarzan lost his crewmate Alexander Slepinin — the threehundred-pound, 
six- foot- five-inch tattooed hit man known as the Colonel who was brutally executed by Monya Elson. 
“My mother loved the Colonel,” Tarzan gloomily recalled. 

Fainberg decided he should move to a safer neighborhood. In 1990, he left his wife and Brighton 
Beach behind, and headed south. 

In America, Miami had become the Russian mob’s second city. Fike Brighton Beach, it had a large 
Russian immigrant population. In the early 1970s, the Miami Beach Police Department began to 



notice that an inordinate number of Russian emigre taxi drivers were committing criminal acts. These 
Russians didn’t fit the cops’ preconceived notion of crooks, however. “They were always neatly 
dressed and very clean-cut and gave the appearance of wanting to fit in and learn the American way 
of life,” says a federal law enforcement report, written in 1994. Gradually, the Miami police learned 
that these taxi drivers were involved in many of the same crimes that had made the Italian Mafia so 
powerful: extortion, narcotics, gambling, and prostitution. “They were a very tight group of criminals 
who had a code of silence that even the threat of arrest could not break,” the report added. 

By the 1980s, the Miami Beach police noted that crimes involving Russian criminals were 
growing craftier; their schemes, more involved — well-organized narcotics trafficking, burglary and 
counterfeiting rings, and sophisticated bank and jewelry frauds. Even as the Russian mobsters 
graduated to white-collar crime, a continuing i nfl ux of Russians allowed them to control the streets. 
“Russian Organized Crime is a new and serious threat to South Florida,” warned the 1994 report. 
“This is a well-educated group of active, young criminals.” 

By the time that Tarzan arrived in Florida, the Russians pouring in were not the taxi-driving sort. 
“Miami was a boomtown for the Russian mob, which came after perestroika with the hundreds of 
millions they had looted during privatization,” says Assistant U.S. Attorney Diana Fernandez. They 
used their vast war chest to buy row after row of pricey condominiums in North Beach, and paid tens 
of millions more for the gated mansions on Fisher Island, the city’s most fashionable residential area. 
Many of the buyers were high-ranking Russian military officers and ex- KGB officials. “These were 
the people who held together the Evil Empire,” one real estate agent said. “These were the assassins 
and the spies.” The Versace-clad Russians loved the balmy, palm-studded tropics, where each new 
day brought the potential for a multimillion-dollar score. Who needed a shvitz in a century-old, 
grime-encrusted Brighton Beach bathhouse when wiseguys could go for a steam and a sit-down at the 
degage Art Deco Hotel Delano’s rooftop spa, and maybe even spy a movie star? In Miami, the 
Russians found their ideal dacha: a base for money laundering that was also close to South American 
cocaine. “Porky’s became the focal point where Russian gangsters could get their bearings when they 
came to South Florida,” said Fernandez. 

Tarzan had opened Porky’s with the help of William Seidle, whom he latched on to shortly after 
arriving in Miami. Seidle, a seventy-one-year-old, longtime Floridian, owns a hugely profitable 
Nissan dealership, as well as the largest Suzuki dealership in America, and is said in Russian mob 
circles to have a criminal lineage that could be traced to Meyer Fansky, the mobster who once 
boasted that the Mafia was bigger than U.S. Steel. According to Brighton Beach gangster Vladimir 
Ginzberg, the Russian mobsters, out of deference, call the energetic, silver-haired Seidle Stariyk, the 
Russian word for “old man.” (Seidle denies that he knew Fansky or has ever done business with 
organized crime.) Brent Eaton, a veteran DEA agent, says that Seidle has been under investigation by 
numerous federal agencies for more than twenty years, although he has never been indicted. “Bill 
Seidle is a great guy,” William Fehman, a former Democratic congressman, told me. Fehman, who 
represented South Florida for twenty years, said Seidle “enjoyed Tarzan’s outrageousness. I’ve know 
Bill for fifty years and he’s always run a kosher business. There are no blemishes.” 

Seidle took a shine to Tarzan the moment they met. “Tarzan was a boisterous, big-mouthed 
Yiddel,” Seidle told me in a Yiddish drawl, one hot, buggy day in Miami. “He’s a Jewboy, you know. 
Just a big- mouth kid, always bragging, boisterous, but very nice, very kind. . . I would describe him as 
a very, very dear friend. I was close to him He was close to our family. They loved Tarzan. They 



think a lot of him. They still feel the same.” 

Seidle saw in Tarzan a younger version of himself: a bold risk- taker, not adverse to crossing the 
line. The men decided that there was a lot of money to be made in the “pussy” business so Seidle 
staked the young Russian to Porky’s for a hidden share of the off-the-book profits, assert court 
documents. Seidle admits only that he collected rent from the club as its landlord, and he denies 
receiving club profits. 

Tarzan’s criminal ambitions did not stop with Porky’s. According to government wiretap 
affidavits, Tarzan cultivated vast fields of hemp in the Everglades, with giant grow lights and a 
landing strip. Tarzan boasted to at least two government undercover agents that he was using aircraft 
to ferry in tons of marijuana from Jamaica. He allegedly even recruited his geeky-looking younger 
brother, Alex, to mule seven large, green garbage bags stuffed with marijuana from New York City to 
Porky’s. “Alex was so afraid of being robbed that immediately after receiving the drugs, he spent the 
night in a New York City hotel rather than at his own home; he then drove the entire trip without 
stopping for the night because he was convinced that he would be apprehended carrying the drugs,” 
asserts a federal wiretap affidavit. 

Marijuana was, for Tarzan, a gateway drug. Before long, he had moved onto cocaine. At the time, 
the Russian Mafiya had little contact with the Colombian drug cartels, though they were eager to 
remedy that failing. Tarzan helped forge a connection, brokering cocaine deals between the 
Colombians and the most powerful mob family in St. Petersburg. In one instance, according to the 
DEA, he smuggled more than one hundred kilos of cocaine in crates of freeze-dried shrimp that were 
flown from Guayaquil, Ecuador, to St. Petersburg. He also ran coke directly out of Miami, a charge 
he hotly denies. The street price for cocaine in Russia was $60,000 per kilo; for every kilo, Tarzan 
made a thousand dollars. 

Tarzan’s principal link to the Colombians came through two men, Juan Almeida and Fernando 
Birbragher. Almeida, thirty-seven years old and the son of a Portuguese-born Miami real estate and 
construction mogul, had been a major cocaine dealer since the mid-1980s. He supervised the tricky 
contacts with the Colombian drug cartels using his luxury car rental shops, a posh marina, and other 
businesses he owned as covers for his illicit activities. Birbragher, meanwhile, was a Colombian and 
a friend of Seidle, and had had excellent ties to the Cali cartel. In 1982, he admitted in a plea bargain 
that he had washed $54 million for them “Birbragher was very close friends with Pablo Escobar,” 
says the DEA’s Brent Eaton. “He [Birbragher] used to buy him [Escobar] sports cars and luxury boats 
and do a lot of other things for him.” Top DEA officials assert that Birbragher also laundered drug 
money for Manuel Noriega, the former Panamanian leader, who was convicted in 1992 of drug 
trafficking. 

Working closely with Almeida, who assured him that they wouldn’t run afoul of the law as long as 
they didn’t sell drugs in America, Tarzan vaulted, precociously, to the top tier of his profession. His 
cocaine business was doing so well that he found himself fending off hostile takeovers from other 
Russian mobsters eager to exploit the new cocaine trade with the Colombians. One of them was the 
man in charge of Ivankov’s street operations in the United States, who tried to move in on Tarzan’s 
thriving business shortly after the vor s arrest. His name was Alexander Bor, otherwise known as 
Timoka. During a sit-down at the Russian banya, or bathhouse, at Miami’s Castle Beach Hotel, 

Tarzan turned the tables on Timoka, declaring that he wanted Timoka to pay him $15,000 a month in 
protection money to do business in Miami. “Get fucked,” Timoka sneered. 



Luckily for Tarzan, Timoka made a grave error while in Miami when he put out the word that he 
was looking for professional hit men to rub out the two New York-based FBI agents who had 
captured Ivankov. A snitch passed the death threats on to the FBI, which put so much heat on Timoka 
that he abandoned his recently built $500,000 house in Massapequa, Long Island, and fled to 
Germany 

Unchallenged, Tarzan proudly sat astride a dominion of crime, smugly holding court for visiting 
Russian dons, who often sought relief in Miami from the vicious mob wars raging at home. One of the 
most powerful dons was Anzor Kikalishvili, who bragged over an FBI wire that he had more than six 
hundred “soldiers” in South Florida. In May 1994, Tarzan introduced Kikalishvili to the owners of a 
local bagel shop and deli. Kikalishvili, flaunting gold chains, gold rings, and an Armani suit, bragged 
about his powerful Mafiya connections in Moscow. He then “persuaded” the couple to sell him 49 
percent of the deli for a very low price, and to pay him $25,000 every month, for his protection. 
“That’s how it’s done in Russia,” he said. Terrified, the owners sold their share of the deli for 
$50,000, a fraction of its worth. Three months later, Kikalishvili visited the couple and ordered them 
to buy the restaurant back for $450,000. He assured them that if he left their home empty-handed, 
there would be an additional $100,000 penalty, and warned that he could “find them anywhere in the 
world and skin them like an animal.” The couple fled in terror to Canada with their children. Tarzan 
took over the deli with Kikalishvili as his silent partner. 

After extortion, Tarzan’s second favorite sport was degrading women. He once bound onto 
Porky’s stage during a burlesque show and dove into the muff of a blond stripper. He was arrested for 
performing a “lewd and lascivious” act, and fined $250. In his defense, Tarzan claimed that the 
stripper had opened her legs “a little more than the law allows.” In an incident filmed by the FBI from 
the roof of a building across the street from Porky’s, Tarzan chased a dancer out of the club and 
knocked her cold. On another occasion, he slammed a dancer to the ground in Porky’s parking lot, 
stomped on her face, and forced her to eat gravel. He once beat his mistress’s head against the 
steering wheel of his Mercedes until the space under the gas pedal pooled with blood. After he 
impregnated another woman, he ordered his cousin to threaten to slit her throat if she didn’t have an 
abortion. He also regularly abused his common-law wife, Faina, a frail, thirty-three-year-old beauty. 
When the police arrived at their home in response to 91 1 calls, she’d quiver in fear, sometimes 
huddled inside a locked car with her daughter. Faina never pressed charges, however. In 1997, a few 
minutes after dropping her daughter off at day care, Faina was killed when her car plowed into a tree 
traveling at a speed of more than 90 miles an hour in a 30-mile-per-hour zone. Her blood alcohol 
level was double the legal limit. The coroner’s office ruled that the death was an accident, although 
the feds initially suspected that Tarzan had murdered Faina and arranged her death to look like an 
accident. 

Tarzan denied that he killed Faina, but conceded that his behavior drove her to her death. If that 
behavior perturbed him, however, he didn’t show it, but rather bragged that he was a sex machine, 
and Faina couldn’t accommodate it. For instance, he claims he owned a “couples club” where he 
often spent evenings servicing wives in front of their voyeuristic husbands. He’d take out four or five 
buxom strippers at a time sailing on his thirty- four- foot yacht; while his baby daughter scooted around 
the galley, the adults orgied. He boasted that he could thumb through any adult magazine — Hustler, 
Playboy, Penthouse — “call my agent, get the girl to the club, and then take her out and fuck her brains 
out. . . . You can’t believe the ego boost this gives you. I was addicted to sex.” 



Meanwhile, Tarzan and Juan Almeida saw a way to get even tighter with the Colombians — by 
hooking them up with Russian gear. They had access to Russian military hardware, from aircraft to 
armored personnel carriers to submarines. Such goods were shockingly easy to come by in the armed 
forces of the former Soviet empire if you knew who to talk to. Russian armories, stored in physically 
deteriorating facilities, and guarded by indifferent, bribable soldiers, were easy pickings for the 
Mafiya. - 

On Halloween day 1992, Tarzan traveled to Latvia, where he told the Colombians that he had 
Russian organized crime contacts who could help him procure six heavy-lift Russian military 
helicopters for Pablo Escobar, who wanted the machines to ferry chemicals to jungle labs that refined 
coke. Tarzan bragged to DEA undercover agents that Seidle financed 10 percent of the trip, an 
assertion Seidle denies. Tarzan was escorted by Almeida, Fernando Birbragher, and a host of 
Colombian and Cuban cutthroats. 

The trip was a bust, and Almeida and Birbragher blamed it on Tarzan. “Tarzan is an idiot,” 
Almeida told me with disgust. “He didn’t know anybody.” 

But in mid- 1993 Tarzan scored in Moscow. According to the DEA, he and Almeida succeeded in 
purchasing up to six MI8 Russian military helicopters for $1 million each. Tarzan later boasted to 
government undercover agents that he had bought the helicopters to traffic coke for “Colombian drug 
barons” headed by Pablo Escobar, and, after the deal was completed, he stayed behind in Moscow to 
oversee the final details. At the request of the Colombians, the helicopters’ seats were removed and 
fuel bladders were added to extend their range, Tarzan later told a government undercover agent. With 
everything set, Tarzan escorted the helicopters to an airport outside Moscow. But just as they were 
being loaded into the belly of a cargo plane bound for Bogota, according to one of the key 
participants, half a dozen jeeps carrying men armed with automatic weapons roared onto the tarmac, 
encircling the transport. Tarzan was ordered to disgorge his precious shipment immediately. He had 
foolishly neglected to pay the local airport Mafiya for permission to purchase the helicopters. They 
threatened to kill him for it. He was hauled into a conference room at the airport to meet the two main 
mobsters. “They were like heavy weightlifters,” he told me. “Their shorts were small on them. They 
were incredible hulks. I was in deep shit.” But the Colombians held a certain mystique for the 
Russians, and by alluding to his close connections with them Tarzan was able to buy some valuable 
time. 

Desperate, Tarzan called Anzor Kikalishvili in Miami. Kikalishvili said he’d make some calls 
and try to smooth things over, but Tarzan would have to explain why he hadn’t cut the “boys” in for a 
share. In another series of frantic transatlantic phone calls, Tarzan related the mess to a smoldering 
Almeida. Almeida advised Tarzan to tell the Russians that the helicopters were for the legendary head 
of the Medellin cartel, Pablo Escobar, and that no one had told him that he was required to pay a 
bribe to get the equipment. Tarzan and Almeida hoped that the Russians, who still had little direct 
experience with the Colombians and the cocaine trade, might make an exception for Escobar — 
especially since Tarzan had dangled the carrot of future cocaine deals. If Escobar wanted the 
choppers, they replied, he’d have to show his face in Moscow and recover them himself. 

Almeida decided that the only way to retrieve the helicopters — and save Tarzan — was to go to 
Moscow posing as Pablo Escobar. At Sheremetyevo airport in Moscow, Almeida was welcomed by 
a motorcade of thick- necked men driving big black Mercedes. He was escorted like a head of state to 
a five- star hotel in the center of the city, and led into a dark-paneled room, where more thick- necked 


men sat around a long conference table. Almeida walked past them to the head of the table where the 
don presided. There was a nervous silence. Suddenly, the Russian seized him in a bear hug, and 
cried, “Pablo, Pablo Escobar. What took you so long? Let’s do some real shit. Cocaine.” 

To celebrate their new friendship, the Russians took Almeida and Tarzan out for a night on the 
town. They went to a dingy boxing ring called the Kamikaze Club, where chain-smoking mobsters and 
their girlfriends, dressed in American designer gowns, had gathered to watch a match. Young men 
dressed in street clothes were led into the ring. Mafiya rules: only one could walk out alive. Blood 
spattered the crowd as spectators placed bets on their favorite combatant, and swilled vodka. In 
order to show that he was a high roller, Almeida ordered Tarzan to bet $500 on every fight, which 
was a lot of money in Russia at the time. The spectacle went on through the night. There was no air- 
conditioning in the club and the stench of blood, Tarzan says, nearly made him vomit. Mortally injured 
boxers, their mouths half open, their ribs broken, were dragged from the mat and dumped in a landfill 
somewhere outside the city. The following day, Tarzan was permitted to fly the valuable cargo out of 
Moscow. Tarzan claims that the helicopters were immediately delivered to the drug barons. 

Tarzan’s crime wave was not passing unnoticed back in the United States. Alarmed at the scale 
and rapid expansion of his and other Russian mobsters’ operations, the state of Florida and a slew of 
federal law enforcement agencies, working with liaison officers from the Royal Canadian Mounted 
Police, the German Federal Police, and the Russian Ministry of Internal Affairs, set up a task force 
called Operation Odessa to try to stem the criminal red tide. 

Operation Odessa’s guiding force was a Russian-born sergeant on the Miami police force, who 
posed as a corrupt undercover narcotics cop. He had succeeded in winning the mob’s confidence, 
infiltrating some of its most closely guarded sit-downs. What he discovered horrified him. In a few 
short years the Russians, through an unprecedented combination of brains, brawn, and chutzpah, had 
replaced the Gambino family, which had been decimated by years of relentless prosecutions, as one 
of the top crime groups in South Florida. “Their obvious sophistication far exceeds that of the La 
Cosa Nostra at its infant stage,” the bearded, professorial Miami assistant U.S. attorney Richard 
Gregory, one of Operation Odessa’s founders, told me in Miami. “Tarzan was the original top Russian 
figure in Miami as far as law enforcement was concerned.” 

Operation Odessa’s agents had so far been unable to infiltrate Tarzan’s close-knit world. That 
assignment fell to Tarzan’s old friend from Brighton Beach, Grecia Roizes, who had by this time 
acquired his nickname “the Cannibal.” (A booking sergeant in Brooklyn had called him “a fucking 
dirty Jew,” and he’d bitten off the tip of the man’s nose.) 

Roizes had also acquired a debt to the DEA. In 1992, he was arrested in Romania for trafficking 
heroin for Boris Nayfeld’s French Connection- sized operation based in Antwerp. Rather than rot in a 
Romanian prison, where he claimed to have been beaten and denied his heart medication, the 
Cannibal made a deal with the DEA. First, he ratted on the members of the heroin- smuggling 
operation, helping the feds shut it down. After that, the DEA dispatched him to the Adriatic port town 
of Fano, Italy, where he became partners with his longtime friend Monya Elson. Elson was running a 
vast money laundering business out of a furniture store for Semion Mogilevich. Thanks to the 
Cannibal, Elson was arrested by Italian authorities in 1995. He was held for murder, money 
laundering, drug trafficking, and for having ties to the Italian mob. “They kept me in total isolation for 
eighteen months,” Elson bitterly complained. “Five times a day, seven days a week, they shook my 



cell. They drove me nuts. I never spoke on the phone. I never had an American or Russian newspaper. 
Psychologically, they destroyed me.” 

While Elson was incommunicado, the Cannibal’s next assignment was in Miami. He had no 
trouble getting close to Tarzan. “The Cannibal and I were like brothers,” Tarzan told me. “We grew 
up in the same town in the Ukraine and lived on the same street in Israel. Our families were close. 
He’s the one who helped me when I arrived in Brighton Beach. He loved me.” 

Using $72,000 in cash supplied by the DEA, the Cannibal bought a managing partnership in 
Tarzan’s restaurant Babushka. Situated in one of Miami’s many strip malls, Babushka had a loyal 
following among Russian emigres who were homesick for borscht, caviar, and kabobs. A local 
reviewer once described Babushka’s staff as “direct fr om Petrograd central casting.... A man/bear 
who resembles a general. A Ural-sized cook. A Rasputin-look-alike waiter.” 

But even in this theme park of a Russian mob joint, the Cannibal’s conduct stood out as 
ostentatious and vulgar. Not only did he bring in his friends, flirt with the waitresses, and pay for 
everything on the house, but he seemed to be trying to bring Babushka down, according to Paul, a 
slender, Russian-born piano player and songwriter who performed at Babushka with his wife, Nelli, 
a singer. 

“On New Year’s Eve, he came in drunk and high on cocaine, and was crude and loud,” said Paul. 
“His behavior was unbelievably bad. New Year’s Eve is a big, big celebration for the Russians. They 
buy presents, new clothes, jewelry. He had nothing ready for the restaurant.” Babushka’s New Year’s 
Eve parties were renowned for generous spreads of seafood, caviar, grilled meats, plenty of 
champagne and vodka, and great Russian music. “For 250 people, we had fewer than a hundred 
lobsters, almost no shrimp, no bread. There was almost no food on the table. Some people left at 
12:30, 1:00 a.m. I said to Tarzan, ‘You let him be partner for this?’ And Tarzan said, ‘I’m desperate 
for money. ’ 

“Tarzan had a big boat,” Paul went on. “I’m the only one who knew how to use the fishing rod. 

One day the three of us” — Tarzan, Paul, and the Cannibal — “were going fishing, and I said we 
needed to buy lines and hooks. We went into a bait shop and the Cannibal didn’t buy too much. He got 
on the boat and he emptied his pockets, which were filled with lines, hooks, all kinds of things which 
he had stolen,” including a fisherman’s cap. “My face went red. He said, Ah, I always do it. It’s fun 
for me.’” 

Paul and Nelli weren’t the only ones who were disturbed by the Cannibal’s corrosive presence. 
The Brooklynite gangster Vladimir Ginzberg, who, according to court documents, was a key 
operative in Tarzan’s large-scale cigarette bootlegging operation on the East Coast, had repeatedly 
alerted Tarzan that the Cannibal was working for the feds. 

“I warned Tarzan about the rumors — that he did in Elson, and the others,” Ginzberg said. “Tarzan 
didn’t listen. So I asked Tarzan why he trusted him He said they were both from the same town. He 
knew his father. He had his friends checked out. And he had a cruel criminal past. That counts for a 
lot. And Tarzan didn’t have a comparable past — and Tarzan wasn’t so smart. He had steroids for 
brains. He had a big-muscle peanut brain.” 

With Tarzan’s confidence secured, the Cannibal began his work. One day, a man named Alexander 
Yasevich walked into Babushka. The Cannibal embraced him like a long-lost comrade. “Hey, how ya 
doing?” he said over hugs and kisses. Tarzan, who was in the restaurant, sauntered over to meet the 
stranger. Tarzan recognized Yasevich from the old neighborhood in Brighton Beach. Yasevich had 



moved there from Odessa as a teen. But unbeknownst to Tarzan, Yasevich had joined the Marines, and 
then became an undercover agent for the DEA. 

“The agent’s cover was that he was an arms dealer and heroin dealer out of New York,” says 
Miami-based DEA spokesperson Pam Brown, who was once part of an elite squad that interdicted 
drugs in the jungles of Peru and Colombia. “Tarzan immediately started running his mouth, telling him 
what a big shot he was, that he and his associates had politicians in their pockets.” Many of their gab 
fests were on Tarzan’s boat or in upscale restaurants. The men consumed a prodigious amount of a 
volatile concoction of ice-cold vodka and Japanese saki poured over a raw quail’s egg. The first time 
Yasevich’s girlfriend, who was also an undercover agent, drank the potion, she puked. 

The drinking and kibitzing paid off. Yasevich learned that Tarzan was in the midst of executing his 
biggest caper yet: the purchase of a $100 million, Soviet-era, diesel-powered submarine for Pablo 
Escobar. 

When Tarzan was first asked to procure the submarine, it unnerved him. The Russian helicopters 
had nearly cost him his life. But this time, he made sure to clear the deal through Anzor Kikalishvili, 
and he traveled to the former Soviet Union with Almeida dozens of times, looking for a submarine. 
Finally, through the most powerful crime boss in St. Petersburg, they met corrupt, high-ranking 
Russian military officers who took them to the front gate of Kronstadt, a sprawling naval base in the 
Baltic, where numerous untended diesel submarines bobbed on their sides, spewing waste into the 
polluted ocean. Anything is available in Russia, former CIA official Richard Palmer told me. The 
Soviet fleet is rotting and the sailors haven’t been paid for months. 

Initially, the Miamians wanted to buy a huge attack submarine for the Colombians’ East Coast drug 
trade. But a retired Russian captain told them they should instead operate on the Pacific Coast, where 
America’s anti-submarine net was less effective. He suggested that they buy a small, diesel-powered 
Piranha-class submarine, which is made of titanium and is much quieter. The Piranhas, with a range 
of one thousand kilometers, are used to plant saboteurs, troops, and spies behind enemy lines. The 
captain told Tarzan that he had slipped the submarine past the Americans during the Cuban missile 
crisis. 

They finally agreed on a ninety- foot-long Foxtrot-class attack submarine that drug lords calculated 
could carry up to forty tons of cocaine. The Colombians planned to base the sub, which would be 
demilitarized and retrofitted to resemble an oceanographie research vessel, in Panama. From there, it 
would transport the drugs underwater to a mother ship near San Diego and outside the United States ’s 
territorial waters. The mother ship would then deliver the coke to ports along the Pacific coast. A 
consortium of St. Petersburg mobsters and two active-duty admirals wanted $20 million for the 
vessel, which was built in 1992 for $100 million. Tarzan negotiated its price down to $5.5 million, of 
which he was to take home $1 million. The Russians wanted the money passed through a dummy 
company in Europe in order to give the Russian politicians who okayed the purchase plausible 
deni ability. Tarzan hired the retired captain for $500 a month and secured a crew of seventeen for a 
two-year contract. Tarzan even got permission to take several photographs of the vessel to send to the 
Colombians. At a party at a dacha, the godfather of St. Petersburg, a man called Misha, made a side 
deal with Tarzan to procure cocaine from Miami for $30,000 a kilo, far above Tarzan’s $4,000 cost. 
To Tarzan, everything looked good. 

On Tuesday, January 21, 1 997, just after Tarzan dropped off his daughter at the William and 
Miriam Tauber Day Care Center, he was stopped in his gleaming white 1996 Jaguar convertible by a 



marked Metro-Dade Police Department vehicle in the Aventura area of Miami. As he spoke with the 
officers, DEA agent Brent Eaton and Detective Joseph McMahon, who had been trailing him in an 
unmarked car, approached. Eaton and McMahon introduced themselves and invited him to join them 
in their car. They told Tarzan that he was in trouble and would be arrested. They asked him to take a 
ride with them to a secure location, where they and a few other officers could speak with him 
confidentially about his predicament. Tarzan agreed, saying, “Em a nicer person than you probably 
thought. I haven’t done anything wrong.” 

When they arrived at the interview site, a DEA training room near Miami International Airport, 
Tarzan was offered a seat at a table and given a cup of coffee. He was not handcuffed or restrained in 
any manner. Michael Me Shane, a DEA inspector, offered him a chance to work with the government 
rather than be arrested. Tarzan replied that he could be very useful to the government, but was not 
well acquainted withU.S. laws and preferred to consult with his attorney before making a decision. 
Eaton told Tarzan that wasn’t a wise decision since his lawyer represented other targets of the 
investigation. “I thought you would tell me what you have and ask me questions,” Tarzan said, 
according to a transcript of the interrogation. “I don’t know what to say because I don’t know what 
you think I have done.” 

McMahon asked Tarzan if he had ever bought liquor for Porky’s or for Babushka from any source 
other than a legitimate wholesaler or liquor store. “Never?” Tarzan declared emphatically. 

“What about your relationship with Anzor Kikalishvili?” the detective asked. 

“Anzor, I know nothing about what he does in Russia,” Tarzan claimed. “I met him at my club. He 
is a sex maniac, always looking for girls. I helped him once when he opened a bagel store in 
Aventura.” Tarzan did admit that he had once picnicked with Kikalishvili. 

“Tell us about your activities with Juan Almeida,” McMahon said. 

“I don’t know what he is up to,” Tarzan said. “He speaks Spanish most of the time.” 

“You mean you travel all over the world with Almeida and you don’t know what he’s up to?” 

“Yes,” Tarzan replied. 

“You know that those airplanes and helicopters you get go to Colombian drug traffickers,” 
McMahon said angrily. 

“They go to legitimate people,” Tarzan insisted. 

When the officers accused him of lying, Tarzan replied, “Maybe I should go to jail, then find out 
what you have.” The agents had had enough. They handcuffed him, placed him under arrest, and drove 
him to the DEA processing room, where he was fingerprinted, photographed, and allowed to call his 
attorney. 

Almeida surrendered to the authorities several days later. Not only had Tarzan talked about his 
activities with Almeida to various undercover agents, but he had even introduced Almeida to 
Yasevich, the DEA undercover agent, at La Carreta restaurant, in Miami. At the time, Almeida told 
the agent that he represented a client with unlimited funds who was interested in buying a Russian 
diesel submarine for illicit purposes, although he said with a laugh that the vessel was going to be 
used to transport stolen gold from the Philippines. Almeida, a suave man with a salesman’s charm, 
told me the sub was intended for an underwater museum in South Florida. After he was arrested, his 
lawyer, Roy Black, said that the sub was intended to carry tourists around the Galapagos Islands. As 
for the Russian helicopters, Almeida claimed the aircraft were actually contracted by Helitaxi, a 
legitimate Bogota-based company, to do heavy lifting at oil rigs in South America. Helitaxi ’s 



president, Byron Lopez, is banned from the United States by the State Department because he has 
allegedly laundered money for drug lords. 

The investigation produced 530 wiretapped conversations in Russian, Hebrew, Yiddish, and 
Spanish. On the tapes and in conversations with the undercover agents, Tarzan constantly implicated 
himself and others in numerous crimes. “We caught Tarzan bragging to our undercover agent about 
how he was hooked up with the Colombian drug lords, and how everything he was doing was for 
Colombian drug lords, and that he was getting the submarine for the same people that he got the 
helicopters for,” DEA agent Eaton says. “A lot of that is on tape.” 

Louis Terminello, Tarzan’s civil lawyer, insists that the only thing that Tarzan is guilty of is having 
a big mouth. “It’s the high school kid who wants the high school girl to believe that he’s got the 
biggest dick in the world.” 

After months of sullen denial, Tarzan decided to cooperate. “He’s admitted to everything,” DEA 
agent Pam Brown told me several months after his arrest. “He keeps saying, ‘Well, this would have 
all been legal in Russia.’” For eleven months, Tarzan was kept in the snitch ward at Miami’s Federal 
Detention Center blabbing about Russian mobsters and Latino drug lords. After negotiating at least six 
proffer agreements, the galled feds cut him loose to stand trial. Not only couldn’t they corroborate 
much of his information, but he said that he would never testify unless he was released on bail. There 
was little likelihood of that happening. The feds had a good idea what Tarzan would do: a government 
wiretap picked up several powerful Israeli drug dealers in Miami discussing plans to help Tarzan 
flee to Israel, which does not extradite its nationals. 

Finally, Tarzan, who faced a possible life sentence, pleaded guilty to racketeering charges, 
including conspiracy to sell cocaine, heroin, and a submarine, and sundry other crimes. He testified 
against Almeida — who was convicted of importing and distributing cocaine and attempting to buy a 
Russian submarine for Colombian drug kingpins to further the drug conspiracy. (The charge of 
purchasing heavy-lift helicopters for the Colombians was dropped.) “Tarzan’s big mouth ruined my 
life,” Almeida says mournfully. According to a well-placed government source, Almeida, who is 
awaiting sentencing, has taken out contracts on the judge and the prosecution team. 

As for the man who helped the feds the most, Grecia Roizes, the Cannibal, looked as if he had not 
a care in the world as he stood erect, his Popeye-like arms bulging through a lime green knit polo 
shirt, calmly awaiting sentencing in the ornate marble courthouse in lower Manhattan. On July 8, 

1998, Federal District Court Judge John Keenan waived his jail time as a reward for services 
rendered to the government, and Cannibal set up a furniture business outside Naples, Italy. 

About a year later, Roizes was in trouble again: he was arrested by the Italian police in Bologna 
for associating with the Italian Mafia, money laundering, extortion, kidnapping, and smuggling. Most 
of his victims were small-time Russian entrepreneurs in Italy. Some of his illicit gains were allegedly 
passed through the Bank of New York. Apparently, while working for the DEA, the Cannibal had also 
been running a thriving criminal empire in Italy. 

The Russian mob in South Florida today is the hub of a sophisticated and ruthless operation. But 
Ludwig Fainberg is no longer a participant. On October 14, 1999, after living in America for 
seventeen years, Tarzan was deported to Israel, with $1,500 in his pocket. He had served a mere 
thirty-three month prison term His light sentence was in return for his cooperation, which reportedly 
included providing intelligence on several alleged Russian mob heavyweights. 

Even as he awaited deportation, Tarzan’s enthusiasm was irrepressible. “I love this country!” he 



told me. “It’s so easy to steal here!” He was already cooking up a new scheme. “I’m going to Cuba,” 
he said. “A few of my Russian friends already own resorts there.” He said that with what he knows 
about the sex industry hell soon be rich again. 



PART TWO 


COT ONT7, ATTON AND CONOIJRST 


8 


POWER PI, AY 


Donetsk, a bleak industrial city in the southeast corner of Ukraine, is not known for producing 
worldclass hockey players. And when Oleg Tverdovsky, a scrawny seven-year-old, tried out for a 
local peewee team in 1983, he didn’t show much promise: his ankles were weak — the result of a 
joint- swelling disease called Reiter’s syndrome — and he was one of the worst skaters in the bunch. 
At first, he didn’t even like the sport much. Still, a coach spied some potential in him and encouraged 
the boy to keep at it. 

He did. By sixteen, Tverdovsky had blossomed into one of the highest- scoring defensemen in 
Russia, playing for a team called the Soviet Wings. But with the fall of communism, Soviet hockey 
also began a steady collapse. Arena freezers frequently broke down, melting the ice. Stadiums that 
once drew five thousand fans were lucky to lure several hundred. “People had a lot of problems in 
their lives,” recalls Tverdovsky. “Hockey tickets are not very expensive, but if you can’t feed your 
family, well, you don’t think about going to a hockey game.” 

Like most of Russia’s best players, Tverdovsky was eventually discovered by NHL scouts, and in 
1 994, at the tender age of eighteen, the Mighty Ducks of Anaheim made him their first-round draft 
pick. He had awesome power and blazing speed, drawing comparisons to Bobby Orr — all the right 
stuff, said the scouts, to become a superstar. “I was excited to get drafted,” he remembered. “To play 
with the best players in the world.” When he arrived in Anaheim, he bought himself a house and a 
sports car. After a fine rookie season, he was traded to the Winnipeg Jets and signed a three-year deal 
worth some $4.2 million, a staggering sum for a young man whose countrymen were earning an 
average of $74 per month. 

Tverdovsky’s prosperity did not go unnoticed, however. One night, a former Russian hockey 
coach of Tverdovsky turned up on his California doorstep and demanded a share of his good fortune. 
The young phenom was terrified, for he knew, as did everyone in Russia, that hockey in the former 
Soviet Union was overrun by the Mafiya, and that it frequently brought its sadistic extortion methods 
to bear on successful players. “They’ll take out a whole family,” said a U.S. law enforcement official 
who specializes in the Russian mob. “But they’ll torture victims first to send out a message — they’ll 
cut off fingers, use acid, decapitate heads. It’s gruesome.” 

In fact, the Russian mob’s sinister grip on sports in the Soviet bloc dates back to well before 
communism’s demise. In the Soviet era, sports stars — along with singers, artists, apparatchiks, and 
black marketeers — were all part of the Soviet Union’s privileged elite. In this heavily criminalized 
society top athletes and mobsters sought out one another’s company to mutually enhance their image 
and prestige. They ate at the same choice restaurants, vacationed together at luxurious spas, and dated 


the same women. They also did business together. “The Mafiya has made the sports business one of 
its sources of revenue,” a Russian sports historian has said. “Bribes, extortion, and killings are 
common.” 

Hockey — one of Russia’s most popular sports — was no exception. From the small-town peewee 
leagues up to the powerhouse national teams, the Mafiya, by force or cooperation, had penetrated 
every level of the enterprise, just as it had most other businesses in Russia. “Many local teams in 
Russia are associated with the mob,” said a Western law enforcement source, noting that they often 
used them for money laundering, as well as for many other illicit profits that could be sucked from 
stadium contracts, concessions, equipment procurement, ticket sales, player and management salaries, 
and tens of millions of dollars of untaxed vodka and cigarettes that the government gave to the teams. 

When communism fell, the former Soviet Union’s rich reservoir of hockey talent — the same 
players who had so often demonstrated their astonishing skills against the world in the Olympics — 
suddenly became available to the West. The NHL’s U.S. and Canadian teams went on a buying binge, 
snapping up the country’s current and future superstars, signing players like Tverdovsky to 
extraordinarily lucrative contracts. But the NHL teams discovered soon enough that they weren’t 
importing only expert skaters and stickhandlers; they were also importing the brutal extortionists and 
gun-toters of the Russian Mafiya who followed in their wake. “Hockey in the former Soviet Union is 
controlled by Russian organized crime,” said a top FBI official. “They control the players who play 
there and they control the players who play here. They can stay in Russia and make 2,000 rubles a 
year or kick back $1 million of a $2 million American contract.” 

Although Tverdovsky was well aware that being in America did not guarantee his safety, he 
nevertheless refused the Russian coach’s demands to be paid off. But the gangsters did not come for 
him. Instead, on January 30, 1996, four goons — carrying a tear gas pistol, handcuffs, and a snapshot of 
Tverdovsky’s forty-six-year-old mother, Alexandra — seized his parents outside an apartment building 
in Donetsk, where they had gone to visit relatives. Tverdovsky received a message from his father: 
the gangsters wanted $200,000 for his mother’s safe return. 

While his mother sat imprisoned in a dank apartment outside Donetsk, Tverdovsky suffered severe 
anxiety, causing his ankles to swell up. “I had a terrible time,” recalled the lanky, six-foot player 
during an interview at a Tex-Mex cafe across the street from the hockey stadium in Phoenix, where he 
then played for the Coyotes. “I didn’t have many details about what was going on.” Still, he didn’t 
inform team or league officials about his ordeal, nor did he reveal his problem to his own teammates, 
fearing that, if word leaked out, his mother would be killed. “We [Russian players] won’t even tell 
each other” about extortion plots, said Tverdovsky. “Not even our best Russian friends.” 

A few days later the kidnappers escorted Alexandra Tverdovsky onto a train bound for Moscow, 
confident that they were on their way to make a trade for a few suitcasesfiil of cash. Suddenly, in a 
rare case of Russian law enforcement competence, the police stormed the train and rescued the 
captive, arresting all four kidnappers in the process. Tverdovsky, however, wasn’t taking any more 
chances. He spirited his parents out of the country and hid them away in a house he bought for them in 
a town in California that to this day he will not name. 

In the NHL, where ex-Eastern bloc players make up 10 percent of team rosters, the list of hockey 
players who have been secretly shaken down, beaten, and threatened by voracious Russian mobsters 
reads like a Who’s Who of the NHL. (In a few years that proportion will grow to 40 percent, and 



most of these players will be tied to the Russian mob, asserts the FBI.) Alexander Mogilny of the 
Vancouver Canucks, Alexei Zhitnik of the Buffalo Sabres, and Vladimir Malakhov of the Montreal 
Canadiens have all been targets of extortion. Even Detroit Red Wings superstar Sergei Fedorov was 
rumored to have had to pay gangsters to be left alone when he first came to America. Mike Barnett, 
Fedorov’s agent, denies the story, though he admits: “If there was an incident, I probably wouldn’t tell 
you. It’s not something we would prefer to have publicized.” Still, Fedorov doesn’t go home to 
Russia unless he’s accompanied by a swarm of bodyguards. 

According to a May 1996 congressional investigation, as many as half of the league’s ex-Eastern 
bloc players have been forced to buy a krysha, or “roof’ — the euphemism for protection. “All the 
NHL teams are aware of the extortion,” says an American law enforcement source. “It’s a huge 
problem,” Mike Smith, associate general manager of the Toronto Maple Leafs, has told the Vancouver 
Province. “There have even been players who have been roughed up.” 

During the 1 996 congressional hearings on the Mafiya, a Russian mobster who testified explained 
precisely how the system worked: “Often when a Russian criminal demands money, the threat is not 
explicit but is clearly understood,” he said, speaking from behind a black felt curtain. “Alexei Zhitnik 
used to play for the Los Angeles Kings. He showed up at a Russian club in Los Angeles one night 
with a new car, expensive clothes, and a beautiful woman. He was young and naive. 

“A man named Sasha, whom I know is connected to a Russian organized crime group, approached 
Alexei and demanded money from him. Sasha was sending Alexei a warning, to make sure he thought 
about his future in Los Angeles. Alexei did not go to the police.” According to several 
knowledgeable sources, Alexei was later hauled under an L.A. pier and beaten. Eventually, the mob 
witness testified, “ [Zhitnik] went to a more powerful criminal group to take care of the problem.” 

Zhitnik, for his part, tried to shrug off the incident. “It was not a big deal,” Zhitnik insisted. “It was 
a stupid accident. It was my mistake. I was not kidnapped.” When asked if he was beaten by thugs, he 
thundered, “Total bullshit!. Nothing happened in L.A.” On the other hand, he concedes: “I can’t say 
extortion doesn’t exist in the NHL. It exists.” 

Almost without exception the FBI has failed to bring extortion charges against gangsters shaking 
down NHL players. “We can’t make a case unless somebody files a complaint,” explains the FBI’s 
John Epke, the head of the organized crime unit in Denver. But fearful ex-Eastern bloc hockey 
players, who often have the inherent distrust of the police that is a legacy of having grownup in a 
totalitarian state, are unwilling to go to the federal authorities. More significantly, like Tverdovsky, 
many of them still have vulnerable family members living in the former Soviet Union. 

Even victims like Vancouver Canuck Alexander Mogilny are unwilling to acknowledge the 
presence of Russian organized crime in the NHL. Yet just a few years ago, Mogilny was abducted by 
two Russian goons who demanded that he deliver to them $150,000 in cash. As he drove to the bank, 
he picked up his car phone and called his agent, Mike Barnett, to ask what he should do. “Go to the 
FBI,’ urged Barnett. So he did: one of the extortionists fled the country; the other, thanks to Mogilny’s 
testimony, became law enforcement’s only successful conviction of a Russian NHL extortionist, and 
was subsequently deported. But today, when asked about extortion in the league, Mogilny says, “Why 
talk about it? It doesn’t exist. There is no such thing.” Oleg Tverdovsky has a similar response. “How 
can I say there is Russian organized crime in the NHL if I’ve not seen it? If you don’t know, you don’t 
know.” 

“It’s their silence,” says a law enforcement official, “that has allowed the Russians to become 



easy extortion victims” and made the FBI’s attempts to convict the mobsters almost impossible. 

Yet the corruption in the NHL goes much deeper than simply the extortion of individual players. 
Far from being victims, at least three of the league’s top superstars have actively befriended members 
of the Russian mob, helping it to sink its roots further into North American soil: they are Slava 
Fetisov, who led the Detroit Red Wings to the Stanley Cup in 1997 and 1998; Valeri Kamensky, who 
did the same for the Colorado Avalanche in 1996; and the Florida Panthers’ Pavel Bure, the four-time 
NHL All-Star nicknamed the “Russian Rocket” for his mind-boggling speed and deft stickhandling. 
“There are as many as ten other NHL players that have associations to Russian organized crime 
figures,” says Reg King, a Royal Canadian Mounted Police agent who specializes in the Russian mob. 

Detroit’s Joe Louis Arena is a dilapidated, shambling facility abutting a river of green sludge. The 
defending champion Red Wings had just finished up an intense, two-hour practice, and the brooding, 
six- foot-one-inch, 215 pound Slava Fetisov sat on a black swivel chair next to his locker, still 
dressed in his pads and sweating heavily. 

At forty he was the oldest player in the NHL, almost two decades older than some of the other Red 
Wings shuffling from the showers to their lockers. His forehead is deeply furrowed, and fissures run 
diagonally down his cheeks. It must have seemed like eons since the nine-time Soviet All-Star 
defenseman played in three Olympics, winning two gold medals and one silver. Many predicted 1998 
would be his last season, and that he would return to Russia to run for political office. “I get lots of 
invitations to join [political] parties,” Fetisov acknowledged. His friend, chess grandmaster Garry 
Kasparov, has said unequivocally that Fetisov is so popular, he “could be the future president of 
Russia.” 

However, Fetisov may need a bit of practice at handling tough questions from reporters. For he 
was ill-prepared when I stuck a tape recorder in front of him and asked what he knew about extortion 
in the NHL. 

“I don’t know,” he replied curtly. “I have never heard of it.” 

“To your knowledge it doesn’t exist?” I asked. 

“I don’t want to talk about it,” he grunted, his dark eyes averting mine. “It’s not related anyhow to 
me and to anybody else in this room. It’s a made-up story, and I don’t want to talk about it.” 

“Who would make it up?” I pressed. 

“I don’t know,” he said, his anger mounting. “I have no idea.” 

Fetisov’s teammates call him “the Godfather.” The nearly universal homage that other Russian 
NHL players accord him reflects not only on his skill on the ice, his sage advice, but on the fact that 
he was one of the first Soviet players to come to play in the league. According to law enforcement, it 
is also an allusion to the fact that he has long been in business with some of the most feared gangsters 
in the former Soviet Union. 

“When Fetisov led the charge of Russian hockey players to North America and joined the New 
Jersey Devils, he was already mobbed-up,” asserted a U.S. law enforcement source. In fact, the FBI 
says Fetisov’s link to the mob goes back as far as the fall of the Berlin Wall. As a national sports 
icon, Fetisov was bound to attract high-level organized crime figures. But in 1989, according to a 
confidential FBI document, he got himself into a jam when he allegedly purchased a stolen \blvo in 
Sweden that he was supposed to bring back to Russia for Amiran Kvantrishvili, Otari’s brother and 
co-head of a powerful Moscow-based crime family. Instead, Fetisov sold the car to another buyer for 



more money. Kvantrishvili in turn threatened Fetisov’s father, which, the FBI believes, marked the 
beginning of Fetisov’s increasingly complex ties to the mob. 

His relationship with Kvantrishvili did not end when he left the country to play hockey in America 
for the New Jersey Devils. In 1992, Fetisov and Kvantrishvili were observed “engaged in serious 
conversation at a Russian discotheque in Moscow during which Fetisov was seen nervously signing 
papers,” states a classified FBI report. In addition, “he [Fetisov] began investing in various business 
enterprises in Moscow in 1993, and was believed to have paid protection money to Kvantrishvili.” 

Kvantrishvili was assassinated by rival mobsters that summer. But where Kvantrishvili left off, 
Vyacheslav Ivankov picked up, and Fetisov, according to a classified FBI report, became the vor s 
“close associate.” The year Ivankov arrived in America, he turned to Fetisov to fill a position in his 
global criminal empire. According to an FBI affidavit seeking a wiretap of his phones, Ivankov 
established a front company in New York called Slavic Inc. to conduct money laundering operations. 
But records filed with the New York Department of State show that on August 26, it was, in fact, 
Fetisov who signed the business incorporation papers, naming himself as president. It was notarized, 
and executed by two lawyers. Though Fetisov was the only named corporate officer, FBI documents 
assert that Slavic Inc. was really run by Ivankov — a fact that even the mobster’s lawyer Barry 
Slotnick confirmed, although he insisted that the business was a legitimate import-export firm. In fact, 
according to the FBI, it was a giant Laundromat for dirty cash operating out of a storefront on Neptune 
Avenue in Brooklyn, as well as a front used to obtain fraudulent visas for mobsters and criminal 
associates. Illicit funds were passed through Slavic Inc.’s bank account to give it the veneer of 
legitimacy, “when in fact they weren’t conducting any commerce whatsoever,” said the FBI’s 
Raymond Kerr. According to Russian and American intelligence sources, the millions flowing into 
Slavic Inc. had already passed through a number of front companies in Russia and Europe before 
winding their way to Brooklyn, where they fueled the Russian mob in America. On August 20, 1 996, 
just a month and a half after Ivankov’s extortion conviction, Fetisov signed the dissolution papers for 
the company, according to New York Department of State records. 

Fetisov, of course, denied everything. He shifted uncomfortably in his seat, perhaps knowing 
Ivankov well enough not to get on his bad side. “Is it true that you were the president of Slavic Inc.?” 

Fetisov turned away, visibly fighting to control his temper. “No,” he said. “That’s not true.” 

“But your signature, in your handwriting, is on the documents, naming you the president of the 
company.” 

“Are you trying to instigate something or what?” he asked. 

“Is there a link between Slavic Inc., you, and Ivankov?” 

“I’ve got nothing to do with this guy, this person, and with Slavic Inc. I have no relationship of any 
kind.” 

“But your name is on the incorporation papers.” 

“What incorporation?” 

“The papers you filed with New York State.” 

“I don’t want to talk about this right now,” he said. “I don’t want to talk about anything.” 

Fetisov’s patience was wearing thin, so I tried another tack, asking him to explain his 
acquaintance with a New York art dealer and hockey fan named Felix Komorov — the man the FBI 
asserts in a wiretap affidavit and confidential documents is Ivankov’s “right hand man in New York,” 
“who was laundering money” for his group, while claiming to be second-in-command in the Brighton 



Beach area, in “control of all the extortionist activities of Russian emigre businessmen.” Though 
Komorov vehemently denies the allegations, he has admitted that he has been in telephone contact 
with Ivankov both before and after the vor was imprisoned. 

What he cannot deny, however, is his avid courtship of Russian hockey players. Fetisov and 
several other Russian hockey players attended a reception at Komorov’s New York Russian World 
Art Gallery on Fifth Avenue, across from Central Park. Its walls were decorated with photographs of 
the jowly Russian shaking hands with a panoply of celebrities, including A1 Pacino, Pierre Cardin, 
and New York City Mayor Rudolph Giuliani. - Komorov also received permission from the NHL to 
make each member of the 1997 world championship Detroit Red Wings a solid silver hockey puck, 
engraved with the player’s name and the Stanley Cup logo, which he bestowed as gifts to the team. 

“Some people like to give us presents,” said Fetisov with an annoyed shrug. “Do we have to say 
no? Do we have to check his background or what? I don’t know what you’re talking about anyhow.” 
Fetisov did admit, though, that he had “some business” with Komorov. 

It is precisely such “business” connections with hockey players that worry law enforcement, for it 
is through them that people like Komorov can spread their influence, reaching into many levels of 
American society. Wall Street has been the Russian mob’s prime target. Gavin Scotty, for instance, is 
a senior vice president at Paine Webber, and a onetime pro basketball player who handles large 
portfolios for a number of Russian NHL players. When he decided the time was ripe for the company 
to do some business in Ukraine and Russia in 1998, he invited in some of these clients to ask who the 
leading Russian business guru in New York was. They unanimously identified him as Felix Komorov. 

As it happened, Scotty already knew Komorov. “A couple of my players had won the Stanley Cup 
so we’ve been invited to parties that he’s thrown,” Scotty said. “I thought he was a legitimate, nice 
guy.” Scotty later met with Komorov at the Oyster Bar at Grand Central Station to inquire about 
potential business deals. The Russian had a number of ambitious plans, and was eager for Scotty to 
meet his associates in Kiev. After the meeting, Scotty was inclined to embark on some of the ventures 
Komorov proposed. 

Then, by chance, he learned that his dining companion might in fact be a high-ranking member of 
the Russian mob. Scotty broke off contact. “I don’t want to be in the middle of problems,” he 
explained. “I’ve got a family, and I’ve got a big, big business, and I don’t need this.” 

As the FBI’s Kerr pointed out, the possibilities available to men like Komorov through 
friendships with hockey players are almost limitless: they can provide introductions to valuable 
business contacts, to high flyers on Wall Street, to their personal money managers, to league coaches, 
general managers, and agents. Kerr suggests one possible scenario: With the threat of violence, a 
mobster forces a player to surrender a kickback on his sports endorsements. From there, the mobster 
could get an entree into the sponsoring advertising firm, by having the player introduce a “friend” 
who’s ostensibly skilled at marketing. “[The friend’s] name is Svetlana.’ She’s an old KGB hand. And 
she works for the mob. She dates a married executive at the firm. The liaison takes place at a hotel, 
and lots of pictures are taken. Then the mob tells the ad executive what it wants him to do. This is 
how it’s done. This happens all the time. All the time. It’s as old as the KGB. Older,” the FBI man 
recounted with a chuckle. 

In certain respects, Kerr says, the current level of corruption in the NHL is strikingly reminiscent 
of the old Jewish and Italian mobs’ i nfi ltration of American society through their control of the 
garment industry and labor in the 1930s and 1940s. The mobs’ first step was to take over many of the 


unions, ranging from the truck drivers and longshoremen locals to the International Brotherhood of 
Teamsters. “Then the LCN bled millions and millions of dollars from the Teamsters’ pension fund, 
and built hotels in Las Vegas with this money,” explained Kerr. “That helped them get into the 
legitimate gambling business and the hotel business in Las Vegas.” These legal and quasi-legal 
operations were much harder for law enforcement to crack, and the vast sums of money made from 
them were later invested into other mob-controlled businesses. The FBI fears the NHL could 
similarly become not only one of the Russian mob’s biggest cash cows but also a stepping-stone into 
legitimate society and commerce. 

Komorov, according to the FBI, is already involved in such schemes. But Fetisov refused to see 
the importance of the connection between Komorov’s relationship with NHL players and the FBI’s 
contention that Komorov is a high-ranking member of the Russian Mafiya. “I know that Komorov 
owns a nice little art studio, and he made presents for all the Red Wings players,” I said to Fetisov. 
“And according to the FBI, he’s Mafiya. ” 

“Why do you have to put all these things together?” Fetisov asked. “They are not related anyhow.” 

“If you go to Brighton Beach,” I said, “and mention the name Komorov, it’s like saying John Gotti. 
Everybody knows who he is.” 

Fetisov continued to insist that he has no criminal dealings with Komorov or Ivankov whatsoever, 
and called such charges “false allegations.” He was completely exasperated. “You’re probably not 
allowed to ask these kinds of questions, right?” Fetisov asked incredulously. “Are you allowed to ask 
any questions you want?” 

“Sure. Yes. This is America.” 

Fetisov realized there was only one escape: furious, he stood and ordered me to leave. “The 
interview,” he said, “is over.” 

Had Fetisov been the only Russian NHL superstar to have befriended the Mafiya, law 
enforcement might not have such cause for alarm. But he is hardly alone. When Ivankov ordered his 
brother-in-law, and second-in-command, Vyacheslav Sliva, to move from Moscow to take over the 
Russian Jewish mob’s Canadian operation, Sliva turned for assistance to someone he considered an 
old friend — Valeri Kamensky, the left-wing All-Star for the Quebec Nordiques (which later moved 
to Denver to become the Colorado Avalanche). 

Though Sliva had lied to immigration officials about not having a criminal past, and though he had 
been able to provide a forged government document backing up that claim, the feared crime lord still 
needed the endorsement of a respected citizen to help him through the visa process. 

Kamensky obliged, asking the co-owner and president of the team, Marcel Aubut, to write a letter 
on Sliva’s behalf to the Canadian embassy in Moscow. “Please issue a visitor’s visa to a friend of 
one of our players, Valeri Kamensky,” wrote Aubut. The document succeeded and Sliva was granted 
an interview with Canadian immigration officials, at which he described himself as Kamensky’s 
longtime friend. “The only reason why I’m coming to Canada,” Sliva told the officials, “is to visit 
Kamensky.” In 1994, Sliva was awarded the visa. 

“So Sliva comes over here on the strength of that invitation,” says a top Canadian law enforcement 
official. “Let’s just say that their relationship was more than just having dinner together. Sliva was 
interested in making sure that Kamensky’s career was going good and that he was looked after, that he 
wouldn’t have any problems. Then later down the road, Kamensky would owe Sliva.” 



It didn’t take long for Sliva, based in Toronto, to dominate Canada’s thriving Russian Jewish mob. 
In the process, however, he drew the scrutiny of the Royal Canadian Mounted Police. “We covered 
Sliva like a blanket,” says the Canadian official. According to testimony by Canadian law 
enforcement, Sliva was recorded talking to associates in Russia and North America, making death 
threats, and discussing drug deals, extortion, and money laundering. Seven of the taped conversations 
were with Ivankov in which the gangsters talked about how to divvy up their proceeds. In 
conversations held between April 28 and May 5, 1994, they were overheard plotting to assassinate 
Igor Golembiovsky, the prominent Russian editor of the newspaper Izvestia, which had published an 
article on April 28 about Ivankov’s connection to some unsavory elements in the KGB. - 

But the Mounties say Sliva isn’t the only Russian crime lord that Kamensky is chummy with. More 
than one hundred phone conversations were monitored between Kamensky and Vatchagan Petrossov, 
whom the FBI contended is an Armenian vor v zakonye and the head of the Russian mob in Denver. 
According to law enforcement officials, the men are “very close,” and their friendship became even 
closer when the Nordiques moved to Denver. 

Petrossov, asserts a classified FBI report, was allegedly Ivankov’s “strategic advisor” and 
involved with him in “drug trafficking and extortion.” Ivankov frequently traveled to Denver, where 
he stayed at Petrossov’s home, even using his address to apply for a Colorado driver’s license. 

Denver may seem like an unlikely refuge for the Russian mob, but by one estimate the area boasts 
as many as sixty thousand Russian emigres, many of them illegal. In addition, the relatively crime-free 
solitude of Denver offers a good cover for laundering money. In order to blend in, the Russian 
mobsters dress tastefully, drive Toyotas and an occasional late-model Mercedes, and live in fairly 
modest homes. They donate to charities and try to keep a low profile. 

Petrossov has described himself as a philanthropist and a businessman, and an officer of a 
midtown Manhattan company called PetroEnergy International, which he claims develops new 
technology in oil production. However, PetroEnergy doesn’t have any customers yet, and prominent 
oil and gas research firms in New York and Houston say they could find no information about 
Petrossov’s purported company. The FBI, Customs, and the NYPD are looking into the enterprise. 

One Petrossov business that did exist was a restaurant called the St. Petersburg, which he opened 
in the early 1990s in Glendale, a small, middle-class suburb of Denver. Ivankov was apparently a 
partner. (A business card identifying Ivankov as the owner of the St. Petersburg was found among his 
possessions when he was arrested in Brighton Beach.) The FBI and the IRS suspected that Petrossov 
and a Denver-based Russian partner constructed the restaurant to launder money: the more than $2 
million it cost to build was wired into the personal bank accounts of both individuals at the First 
Interstate Bank in Denver in increments of $200,000 and $300,000. “All construction was paid for in 
cash, as were the land, their personal residences and cars,” the FBI report says. “Russian emigres 
working on the project have been treated roughly, with payments to them delayed.” 

The sprawling restaurant covered over 16,500 square feet, featured a billiards room, and sported 
a state-of-the-art stage for Vegas-style floor shows. Despite its size and amenities, it was almost 
always empty, even on weekends, said federal law enforcement sources who surveilled the eatery. 
“The restaurant does not seem to generate enough business to pay the salaries of the employees 
brought from Russia to serve and entertain,” said the FBI report. Beefy Russian wiseguys seemed to 
be its only customers. “I know Ivankov was there,” Moody says. “Two or three other thieves-in-law 
that visited the United States stopped there, too.” 


The source of the restaurant’s financing, the feds discovered, was apparently Intercross 
International, a company in Moscow in which “Thief- in-law’ Petrossov is a director,” according to a 
classified FBI report. Intercross’s income was derived from deals Petrossov made importing 
cigarettes fromR. J. Reynolds Tobacco Co. in the United States and manufacturing polyester goods 
for sale in Russia. Much of the cigarette trade in Russia is untaxed contraband dominated by the mob, 
and Petrossov was reported to have been able to stay in business by making payments to a people’s 
deputy in the Russian government, says the FBI document. He also made contributions to political 
figures who allowed his shadowy company to operate unencumbered from a heavily guarded 
compound in Moscow. 

It was no coincidence that the restaurant, which was partly owned by Petrossov’s wife and 
renamed Maverick’s Steak House in the mid-1990s, was Kamensky’s favorite hangout. He was 
apparently so taken with it that he appeared on Denver television commercials as Maverick’s 
pitchman. At one point, according to a well-placed law enforcement source, the Avalanche star was 
asked by the FBI if he knew Petrossov, or had any information about the extortion of Russian hockey 
players in the NHL. Kamensky denied all knowledge of both. “He lied through his teeth,” says the 
source. (Kamensky, traded to the New York Rangers in 1999, never responded to requests for an 
interview.) 

In June of 1997 the Mounties were able to prove that Kamensky’s friend Sliva had forged the 
document averring his crime-free past — in fact, FBI records indicate that Sliva had spent ten years in 
the Gulag with Ivankov for extortion and torture. The Immigration Board, ruling that he posed a grave 
danger to Canada, deported the haggard- looking mobster via a jet bound for Moscow. 

Unlike Sliva, Petrossov managed to sidestep an attempt in 1997 to deport him on visa fraud for 
failing to disclose his criminal past, which a confidential FBI document says included fifteen years in 
the Gulag for rape and inciting a riot. According to law enforcement sources, his lawyer convinced a 
judge not to give credence to the accusations of a corrupt communist regime, claiming that his client 
was set up by a prostitute, and that, moreover, his record was expunged by a Soviet court in 1989. 
Not surprisingly, one of Petrossov’s character witnesses at the Denver deportation hearing was Felix 
Komorov, who was identified in court as president of Rolls-Royce of Moscow - 

Nevertheless, when Petrossov — Ivankov’s cousin by marriage — last tried to enter Canada on 
unspecified business in 1996, “we kicked his ass across the border,” beamed Glenn Hanna, a 
criminal intelligence officer of the RCMP’s Eastern European Organized Crime Division. He added 
that a computer check identified Petrossov as a thief-in-law and a major Russian gangster. 

Despite Petrossov’s successful bid to remain in the United States, the FBI still considers him the 
leader of an increasingly active Russian mob in Denver. It has assigned one of its top agents — a 
veteran of the Oklahoma City bombing case — to reexamine the thief-in-law’s extensive file line by 
line. 

Petrossov’s home is in leafy Glendale. One Friday afternoon in the winter of 1998, 1 decided to 
pay him a visit to ask about his relationship with Kamensky and Ivankov and extortion in the NHL. In 
a bit of a role reversal, I brought along an attorney built like a nose tackle, who is licensed to carry a 
concealed weapon and is black belt in Sambo, a form of Russian martial arts. Usually, it is a big 
Russian who knocks on a victim’s door; so when the freshly shaven and heavily perfumed Petrossov 
opened the door wearing an expensive Italian knit shirt, slacks, and shoes, he seemed a little taken 
aback. I introduced myself. 


“Friedman, you are a bad man, a liar!” he barked — apparently, my reputation had preceded me. 

He accused me of persecuting the Russian people with fabricated stories about mobsters. His tirade 
was interrupted only when his pink shar-pei, Amy, darted out of the house and into the street, agitating 
him even more. “Amy, come back,” he pleaded to the pooch. 

“It’s not proper,” he said. “You come without calling?” 

“I’m sorry, Mr. Petrossov, but you have an unlisted number.” 

Not surprisingly, he refused to answer any specific questions about whether he is involved with 
organized crime, has done time for rape, or is friends with Kamensky and Ivankov (although he 
attended Ivankov’s month-long extortion trial in Brooklyn, and defended him in an interview with the 
New York Daily News, calling him “a hero to the masses.” He still visits Ivankov in prison, and is 
allegedly the Armenian vor who handed Ivankov the suitcase stuffed with $1.5 million in cash when 
he arrived at Kennedy Airport). 

“Why are you afraid to answer my questions, Mr. Petrossov?” I asked. “Law enforcement says you 
are a vor v zakonye. ” 

“What is law enforcement?” 

“They say that you are a godfather,” I said, standing nose-to-nose and toe-to-toe with the dapper 

vor. 

“I don’t know what you mean!” He shouted. Shaking with rage, he finally threw me off his 
property. As a parting gesture, he slammed the front door so hard that it bounced back open, barely 
missing his precious little Amy. 

Pavel Bure is as slick as ice. Despite his many ties to Russian mobsters, the twenty-seven-year- 
old four-time All-Star handles grilling like a veteran politician, claiming he has never heard of the 
Russian mob’s extortion of hockey players. 

“People have problems everywhere,” said Bure with a shrug, as he sat, freshly showered and 
wearing a T-shirt and jeans, in the locker room of the spectacular Vancouver stadium that’s home to 
the Canucks, where he was then playing. “But I never heard somebody who had, like, problems with 
the Mafiya or whatever. I don’t know,” he continued with a smirk, “what’s Mafiya? It’s the criminal, 
right?” 

Bure, with his soft, blond good looks, isn’t as innocent as he pretends, for he has never denied his 
close friendship with forty- nine-year-old Anzor Kikalishvili, the native Georgian the U.S. government 
considers one of Moscow’s top crime bosses. In addition, he has been seen in Moscow in the 
company of singer Joseph Kobzon who is, according to a classified FBI report, “the spiritual leader” 
of the Russian mob, and his stunning New York University-educated daughter. As early as 1993 the 
Vancouver Canucks had ordered Bure to stop his unseemly associations with Russian underworld 
figures, and though he agreed to the demand, he has in fact never honored it. 

“I spoke to an agent who spent a lot of time in the former Soviet Union,” recounted a source close 
to the congressional investigation of the Russian mob and the NHL. “He said, This guy Bure, you just 
wouldn’t believe who he hangs out with over there. He’s constantly doing the town with the mobsters/ 

In fact, Bure is also in business with them. He and Kikalishvili have recently reestablished the 
watchmaking concern of Bure’s great- great- great- grandfather, which was famous for the beautiful 
timepieces it made for the czars. They are “very, very expensive,” Bure said proudly. “I gave one to 



the mayor of Moscow.” Boris Yeltsin was also a recipient of one of the watches. 

In early 1998 it was widely reported in Russia that Kikalishvili had named Bure president of his 
“nonprofit” company, the Twenty First Century Association — a promotion from Bure’s former title of 
vice president in charge of sports. Billboards throughout Moscow depict a beaming Bure and 
Kikalishvili promoting the Twenty First Century Association. While the FBI asserts this business is a 
Mafiya front that is worth at least $100 million in illicit funds, Kikalishvili insists it is a legitimate 
enterprise. The company has extensive interests in real estate, hotels, banks, and as many as ten 
casinos. According to FBI records, it also retains a combat brigade of fifty ex- athletes to protect it 
from other mob families and carry out criminal activities such as extortion and arms trafficking, 
including the sale of high-tech weapons to Iran. 

Yet when I asked Bure if he is president of the Twenty First Century Association, he denied it. 
“How could I be the president if I play here in the U.S.?” he asked. 

A few weeks later, in a telephone interview from his Moscow office, I asked Kikalishvili the 
same question. 

“He was the vice president for sports and still helps,” replied Kikalishvili, carefully choosing his 
words. “So of course the vice president, when the president leaves, should assume the role of 
president.” 

The relationship between the Russian Rocket and the Russian gangster dates back to Bure’s 
childhood. “I knew him when he was a boy and played on a children’s [hockey] team,” Kikalishvili 
acknowledged. A sportsman himself, he eventually became head of the Russian Youth Sports League 
and, later, the Russian Olympic Committee. 

Kikalishvili, forty-nine, initially impressed his fellow gangsters as a pompous buffoon: he 
claimed to be a descendant of an ancient Caucasus prince named Dadiani, he used a royal crest, and 
he featured his own lordly visage on a vintage wine he produced. Over time, however, Anzor 
“demonstrated new maturity,” revealed a classified FBI report. During his sojourn in Miami in the 
mid-1990s, he was allegedly involved in the drug trade with South America, in bringing Eastern 
European prostitutes to the United States, buying tens of millions of dollars’ worth of real estate to 
establish a beachhead, and in extortion with Tarzan, according to an FBI wiretap affidavit and law 
enforcement sources. “People treated him like a god when he was in America,” says retired FBI agent 
Robert Levinson, who specialized in Russian organized crime. 

Kikalishvili, of course, denied all criminal allegations. “In my whole life, I’ve never been in a 
police station, even as a witness,” he told me. “I’ve never stolen anything, not even a pack of gum.” 
He insists that he is merely a philanthropist, though few philanthropists are currently on the State 
Department’s watch list of organized crime figures. But even international law enforcement’s opinion 
of Kikalishvili apparently isn’t good enough for the Russian Rocket. 

“I have to see [the evidence] with my own eyes, you know, to believe it,” said Bure, who was 
traded to the Florida Panthers in January 1 999. “I know the guy. He’s really nice to me. So what am I 
supposed to say, ‘You’re not my friend anymore’? I don’t think it’s fair and I think it’s rude. There’s 
got to be a really big reason why I don’t want to be a friend with him. Like, if he does bad stuff, 
like. . . drugs or arms, some big deal, you know?” 


While ex-Eastern bloc players like Pavel Bure have their own reasons to continue associating 
with the Russian mob, the real question is why the NHL tolerates its presence. Despite organized 



crime’s frightening penetration into the sport, the NHL, according to several sources, stood by idly, 
even stonewalling the 1996 congressional investigation into the situation. “We had subpoena power,” 
says the committee’s chief investigator, Michael Bopp. “We were a congressional committee, and still 
doors were just slammed in our faces at every turn [by top league officials].” 

Bopp first contacted the league’s head of security, Dennis Cunningham, in the fall of 1995 for 
assistance. “He was all excited,” Bopp recalls. “He said, ‘Oh yeah, this is a problem Players have 
come to me and told me about extortion attempts, actual extortion. I’m glad someone is looking into it. 
We’re going to do everything we can to help you out.’” 

Although Cunningham has claimed that he attempted to help with the congressional investigation, 
Bopp says that, “Slowly... over the next few months, [Cunningham’s] demeanor changed 180 degrees, 
to the point where [he was saying], ‘I don’t know why you are looking into this. This isn’t a problem.’ 
The league just didn’t want us poking around.” 

The FBI, likewise, has had little success in dealing with the NHL. “The teams won’t let us talk to 
players about extortion,” says a frustrated FBI official. “And we’re here to protect them.” 

As a result, federal authorities have come to fear that the NHL is now so compromised by Russian 
gangsters that the integrity of the game itself may be in jeopardy and that the most dreaded word in 
sports might possibly infect professional hockey: “fix.” “If you have a real high-powered scorer and 
you take him out of the game, it really helps out on the odds,” says former top FBI official James 
Moody. “Gangsters play the odds. If they can cut down on the odds by taking out the prime scorer, or 
if the player takes himself out by purposely getting into foul trouble and is banished to the penalty 
box, then the potential to fix a game is there.” 

“Organized crime is in the gambling business,” says another top FBI official. “If they can handicap 
the game with their players they will beat the spread. Do we know that Russian organized crime has 
tried to fix games in the past? What’s the difference? That’s exactly where they are going.” 

“That’s the biggest concern,” concurs Moody. “And I think as time goes on we’re seeing more and 
more of that.” 

If the “fix” is in, the NHL isn’t doing much to stop it. “I get really irritated with the National 
Hockey League,” says another FBI agent in a large regional market with an array of pro sports teams. 
“Professional baseball, football, and basketball want us to be involved if we know of gambling, or 
dope, or anything that goes on with those leagues. But the National Hockey League, they don’t care.” 
Though the FBI office in New York has had some contact with the league, which has its headquarters 
there, the FBI man maintains, “I’ve never been asked to go talk to the National Hockey League [in my 
city], and as far as I know, none of our people has been asked to go to speak to any National Hockey 
League team” 

After I wrote an investigative article documenting the Russian mob’s infiltration of the NHL for 
Details magazine in May 1998, the league threatened to sue for libel and hired James Moody to look 
into the matter. Moody, who had left his position as the FBI’s head of organized crime in 1996 to set 
up a private investigative agency, was asked to verify the claims of player extortion and mob 
collusion and provide an analysis. Moody had already worked occasionally for the NHL, having been 
responsible for providing the security for the Stanley Cup when the Detroit Red Wings’ Russian 
players brought it to Moscow for a glittering celebration. To guarantee its safety, the cup was locked 
inside the KGB’s notorious Lubyanka prison. 

In the course of his investigation, Moody reinterviewed some of the article’s off-the-record law 



enforcement sources, and tapped his considerable contacts in Russia. “Overall, the article was as fair 
and as accurate as it could possibly be,” the FBI’s John Epke told Moody. 

Moody’s probe unsettled him. “You look at some of the players like Slava Fetisov and. . . his 
association with Ivankov, and Kamensky’s association with some of the thieves-in-law. . . [and] it is a 
cause for great concern.” As for Bure’s relationships with mob bosses, he says, “Anzor Kikalishvili 
and Kobzon have been ID’d before Congress as members of organized crime and if you ask anyone in 
Russia they’ll tell you the same thing.” Moody sent his report to NHL headquarters, and the league 
could no longer plead ignorance, for it co nfi rmed a disturbing portrait of the mob’s insidious 
influence over the league. “Russian organized crime has a major foothold in the NHL,” said a top 
bureau source, “and we’ve talked to them and they say it doesn’t exist. . . . Then they hire one of the top 
experts in the world with the best sources in Moscow to prepare a report [which] said [the piece in 
Details] was letter perfect, and that the situation is actually quite worse. [Moody] has an unassailable 
reputation. ... So now why wouldn’t they cooperate with law enforcement or start their own 
investigation?” 

Of course, the NHL has never made the Moody report public. Nor has Bure, Fetisov, Kamensky, 
or any other player associated with Russian mobsters been officially reprimanded, censured, or 
suspended. The league’s corporate counsel has stated that he is not troubled by Fetisov’s and 
Kamensky’s alleged relationships with Russian crime bosses, and that Bure’s friendship with 
Kikalishvilli was not at the point “where we thought it was problematic, either to the image or 
integrity of our sport.” If it was, he said, “We would act on it.” Meanwhile, Moody’s confidential 
document is evidently gathering dust. 

Since NHL commissioner Gary Bettman and head of security Dennis Cunningham both refused all 
requests for interviews, the reasons behind the NHL’s apparent lack of concern for its players can 
only be surmised. A mixture of fear and greed seems the most obvious explanation. “Russian 
organized crime has a stranglehold over the league, [and] for the NHL to acknowledge it would be a 
PR disaster,” said a top FBI official, noting that the league’s top brass probably fear that its 
advertising revenue, its $600 million deal with Disney to broadcast hockey over ESPN and ABC, and 
even its supply of raw Russian hockey players might vanish were it to challenge the Russian Mafiya. 
“The league would see it as an existential threat.” 

Finally hockey’s critics say the league’s moral standards are simply lower than those of other 
major sports. For example, the National Football League and baseball have gone a long way to 
combat even the appearance of impropriety. New York Jets football legend Joe Namath was forced 
by the commissioner of the NFL to sell his popular Manhattan restaurant, which was frequented by 
mobsters, or give up his career. New York Yankees owner George Steinbrenner was banned from 
baseball’s American League for three years for having had a relationship with a gambler. Baseball 
great Pete Rose was banished from the sport for life for gambling on baseball. 

Nevertheless, at the NHL, it is business as usual. Jittery NHL scouts, scouring the far corners of 
the ex- Soviet superpower for talent, are as vulnerable to mobsters as the players they are trying to 
sign. It is not uncommon for gangsters to demand that scouts pay protection money to be able to 
operate, international law enforcement sources say. If they’re lucky enough to sign a promising 
prospect, they may also be asked to pay a percentage of the player’s contract. 

Meanwhile, the NHL is reportedly exploring the possibility of expanding the league to the ex- 
Soviet bloc at a time when hockey there has perhaps never been more corrupt. In April 1 998, the 



Russian Ice Hockey Federation’s president, Valentin Sych, was gunned down near his country home 
by an assassin with a Kalashnikov assault rifle. Sych had been foolhardy enough to crusade against 
the presence of organized crime in sports. Just before he was killed, he charged that senior Russian 
hockey league officials are “the biggest thieves. All they’re concerned with is lining their own 
pockets. Our hockey is now so corrupt that I don’t see how we can ever clean it up.” In the wake of 
Sych’s murder, four hockey players were killed or grievously injured in the former Soviet bloc by 
assailants who demanded a piece of their salary. One, twenty-year-old Maxim Balmonchnykh, was 
stabbed while visiting his home in the industrial city of Lipetsk just after he had secured a 
multimillion-dollar contract with the Mighty Ducks of Anaheim, which is owned by Disney. 

If the NHL plans to open franchises in the former Soviet Union, it will almost certainly have to 
negotiate with the Mafiya. Everyone who wishes to do business there, from Fortune 500 companies to 
adventurous entrepreneurs, “has to play the game to survive,” says Joel Campanella, the New York 
cop who worked on the Brokhin case and is now a senior intelligence specialist for the U.S. Customs 
Service. As long as the former Soviet Union provides such a rich reservoir of talent, the NHL is 
likely to continue its de facto accommodation of the mob. And as long as everyone from the league’s 
superstars to its own commissioner fails to speak out against it, the NHL will remain an irresistible 
opportunity for the world’s most powerful and ruthless criminal cartel. 



9 


THF MONEY PLANE 


On a hot, muggy afternoon in September 1992, two Hungarian police officials — a man and a woman 
— approached Alexander Konanikhine as he ate lunch with his wife at the Aquarian Hotel in 
Budapest. The lanky, twenty-three-year-old banker from Moscow kept a comfortable apartment in 
Budapest, where he often went for business. But a premonition had prompted him to check into the 
more secure luxury hotel. The policewoman, wearing a drab brown pants suit, ordered Konanikhine 
to accompany them to the Ministry of Security for questioning. They produced IDs, but Konanikhine 
could not read Hungarian. 

“Do I have to go?” Konanikhine asked. 

“No,” said the woman. “We don’t have official orders. But it will save a lot of trouble and 
paperwork if you come with us.” 

Konanikhine was driven to an ornate, five-story building in the center of downtown Budapest, 
several blocks from the security ministry. When the police ordered him inside, Konanikhine was 
suddenly terrified. He was the head of the All-Russian Exchange Bank, the largest commercial 
financial institution in the former Soviet Union. Ever mindful of the large number of Russian bankers 
who had been kidnapped and assassinated by mafiosi, he told his abductors that he had changed his 
mind and wanted to go back to the hotel. 

“That’s too bad,” said the woman, a semiautomatic pistol protruding from her jacket. “We insist.” 

Konanikhine was led into a large room, and then a smaller inner sanctum where V B. Adeev, the 
All-Russian Exchange Bank’s chief of foreign investment, was standing inside the doorway. Adeev, 
twenty-five, was a massively built man with a Buddha belly. He was flanked by an even bigger 
Russian who was introduced as Sasha. “Most of the talking was done by Adeev,” Konanikhine 
recalls. “The big guy didn’t need to talk. Adeev wanted everything! My companies! All my money!” 

Konanikhine, who was used to having his orders followed, and was irritated by Adeev’s 
insolence, snapped, “You cannot tell me what to do!” 

“You want me to kill you?” Adeev sneered, threatening to toss the young banker into a scalding 
bathtub and have Sasha work him over. Sasha lumbered toward him brandishing an electric iron, an 
incarnation of brute force. 

“I don’t want to die, Adeev,” Konanikhine whispered. 

“No pain. Just sign everything over.” 

“I was considered easy prey,” Konanikhine, now thirty-three, recalls without a trace of emotion. 

“I was young and had a baby face. I didn’t look dangerous. Many Russian businessmen have a very 
heavy look. They look like you don’t want to fuck with them. That’s the message and it was their 


protection.” 

The next few moments, he knew, would be dicey. He either played along, or Sasha would kill him. 
But he feared that as soon as he signed away his assets, he’d be killed anyway, and then they’d go 
after his wife. So Konanikhine stalled for time. 

“I said, ‘Fine. How do you want to do this?’ “ 

“Well, just call your bank and transfer your money,” Adeev instructed him. “I have a list of your 
accounts and business holdings.” 

Konanikhine convinced his captors that he needed his own letterhead stationery, a notary, and an 
attorney in order to complete the transfers without arousing the suspicion of his Swiss bankers. The 
process, he said, would take several days. He haughtily demanded to be taken back to his hotel so he 
could begin the paperwork. 

“They were extremely dangerous, but very stupid,” Konanikhine recounts. “I talked to them with a 
tone of authority. Russia and Eastern Europe are divided by social classes. They were from the 
subservient class used to taking orders from bosses.” Konanikhine shook hands all around, and 
praised them for their fine organization. “Their social position in Russia was much less than mine, so 
it was like a general complimenting a private.” 

Konanikhine was driven back to the Aquarian, minus his passport and cash, which the group kept 
in order to prevent him from fleeing. Six guards were also posted in the hotel — one in the corridor 
near his room, the others in the lobby. Later that evening, Konanikhine calmly retrieved a second 
Russian passport with multiple business entries into the United States and some U.S. currency that he 
had earlier deposited in the hotel safe. He and his wife then somehow managed to slip out of the hotel 
by walking right out the revolving front door. Waiting for them was a friend with whom they had 
previously made dinner plans. “We jumped in our friend’s car,” Konanikhine remembered. “I told him 
to drive like crazy. He did. He was a businessman. He had the latest model of Volvo. The thugs tried 
to arrange a pursuit in a couple of Czech- made S codas. They had no chance. We outran them in about 
one minute. We flew top speed to Bratislava, which is just two hours away from Budapest.” There, 
Konanikhine and his wife boarded a plane bound for JohnF. Kennedy International Airport. “The next 
day we were walking in New York.” 

While Konanikhine, relieved to land safely on U.S. soil, was stepping off the plane at JFK, a not 
unrelated event was unfolding at a terminal nearby. At Gate No. 14, the usual assortment of 
passengers milled about waiting to board Delta Flight 30 nonstop to Moscow: American businessmen 
prospecting the new Russian capitalism, Russian entrepreneurs returning from investor hunting, 
expatriates going home to visit family, tourists yearning for a glimpse of the once-closed Soviet land. 
One passenger, though, was a courier, and knew something none of the other passengers was aware 
of: that the plane would be carrying one million fresh hundred-dollar bills in its belly. 

At about 5:00 p.m. a cream-colored armored truck drove up to the red, white, and blue Boeing 
767. While Delta workers casually went about tossing luggage into the hold, two armed guards began 
placing large white canvas bags on a conveyor belt. In the bags were stacks of uncirculated new $100 
bills, all still in their Federal Reserve wrappers, dozens to a bag. And there were dozens of bags. 

The plane departed JFK at 5:45 p.m. Throughout the nine-hour flight, the unarmed courier, who 
worked for the Republic National Bank of New York, relaxed in the passenger cabin while the money 
sat “all by its lonesome” in the cargo hold, according to one law enforcement source. Upon arrival at 
Sheremetyevo airport at 10:55 a.m. Moscow time, the money was transported by a fleet of armored 



trucks to Russian banks, which purchased the $100 bills on behalf of clients, who typically paid for it 
with wire transfers from London bank accounts. 

Rather remarkably, no one ever tried to hijack Delta Flight 30, even though it left JFK at the same 
time five days a week — rarely carrying less than $100 million and sometimes more than $1 billion. 
Since January 1992, federal authorities estimate more than $80 billion — all in uncirculated $100 
bills, hundreds of tons of cash — was shipped to Russia. That amount far exceeds the total value of all 
the Russian rubles in circulation. The huge shipments of money remained safe only partly because of 
security; another reason was that anybody who might have been inclined to pull off such a heist was 
also well aware who is buying all those $100 bills. 

“If you rip off Russian banks, you rip off the Russian mob,” says one Mafia source here in the 
United States. “And no one’s got big enough balls or a small enough brain to do that.” 

The Russian mob, according to numerous well-placed law enforcement sources, has been using an 
unimpeded supply of freshly minted Federal Reserve notes to finance its international crime 
syndicate. Ironically, the cash is supplied to dirty banks in Russia with the full blessing of the Federal 
Reserve in an attempt to prop up the ruble and preserve Russia’s fragile free market economy. 
American C-notes have become the unofficial currency of Russia, and, of course, can get things done 
there that rubles cannot; but the hundreds are also being used to fuel the Russian mob’s flourishing 
dollar-based global drug trade, as well as to buy the requisite villas in Monaco and Cannes. The 
Russian Mafiya has also used laundered funds to set up operations abroad, including its American 
offshoot in Brooklyn’s Brighton Beach, and has begun investing in legitimate businesses across 
Europe and in the United States. 

In his speech to the United Nations in January 1995, President Bill Clinton declared money 
laundering a threat to national security. “Criminal enterprises are moving vast sums of ill-gotten gains 
through the international financial system with absolute impunity,” he said, signing a presidential 
directive ordering the attorney general and the Treasury to identify individuals and organizations 
involved in global financial crime and seize their assets here and abroad. 

When the Soviet Union collapsed in 1991, so did the entire government-controlled banking 
system. Replacing the government banks were private institutions chartered and supposedly regulated 
by the new Russian Central Bank. But as Major General Alex Gromov of the Russian tax police told a 
1 994 international conference on Russian organized crime, the “application” to charter a new bank 
typically consisted of making a $100,000 bribe to a banking official. “A grossly underregulated 
banking sector sprang up virtually overnight,” says Harvard economist Jeffrey Sachs. “Now you have 
two thousand banks, many of which are deeply undercapitalized, and therefore everything is 
possible.” 

No one saw the possibilities more clearly than the mob. On July 2, 1993, two chartered jets 
touched down in Yerevan, the capital of the Republic of Armenia, and disgorged a panoply of 
wiseguys from the United States, Germany Turkey Italy and South America. They had been summoned 
by Rafik Svo, the gangster equivalent of an international diplomat, who had tried to broker the peace 
accord between Elson and Nayfeld. Svo was determined to bring order and mutual prosperity to the 
Thieves’ World by ending destructive turf wars and forging alliances between the Sicilian Mafia, the 
Brighton Beach Organizatsiya, and Colombian drug lords, all of which sent emissaries. At the 
meeting it was decided that the Russian banking system, new and vulnerable, would be used to 



launder funds, make favorable loans to “friends,” and supplant Zurich as a haven for dirty money The 
big joke at the Armenian conclave was, “Why rob a bank when you can own one?” 

While initially the mob used Russian banks just to park their money, they soon began to “buy 
banks, to find out who had big deposits so they knew who to kidnap,” said Jack Blum, a Washington 
lawyer who directed congressional investigations into money laundering and who broke open the 
Bank of Credit and Commerce banking scandal. Then, in collusion with politicians, government 
bureaucrats, black marketeers, and the KGB, the mob used the banks to facilitate the huge post- 
perestroika looting of the former Soviet state. Profits from the sale of stolen raw materials, of 
weapons snatched out of military arsenals, and of assets stripped by insiders from newly “privatized” 
industries were all spirited out of the country into off-shore companies and bank accounts. U.S. 
officials privately complain that tens of millions of dollars in aid have gone into Russian banks, never 
to be seen again. In fact, within just two years after the fall of communism, untold billions’ worth of 
rubles, gold, and other material assets had already disappeared from the former U.S.S.R. 

“Many of these Russians do not consider their activities to be criminal,” said a CIA official. “For 
them, it is just ‘business.’ Their sense of right and wrong is nonexistent.” Crime was the only growth 
industry in Russia, and the country had become, in the words of one former CIA director, a 
“kleptocracy.” 

Of course, that illicit money was not applied toward capitalizing legitimate businesses. Almost all 
of it was used by the Mafiya to fund its international criminal activities, from extortion to drug 
trafficking to arms dealing. Mob-controlled Russian banks took in huge deposits of narcodollars from 
South America, converting them to rubles, then back into dollars through European and U.S. banks. 
Increasingly, they have purchased European companies with histories of legitimate banking activity, 
and then used them as a conduit to pass illicit funds into the international banking system. More 
ominously, they have acquired hidden control of banks in Austria, Germany, France, Switzerland, and 
England, according to U.S. law enforcement sources. In fact, in only eight years, the Russian banking 
system has already become one of the world’s leading money laundering centers, replacing Panama as 
the favored dirty-currency exchange of the Colombian cartels and the Italian Mafia. 

“Almost all Russian banks are corrupt,” Major General Alex Gromov explained at the 
international conference, which was co-sponsored by the Financial Crimes Enforcement Network 
(FINCEN), which tracks money laundering for the U.S. Treasury. A 1994 classified CIA report 
identified ten of the largest Russian banks as mobbed-up fronts. And in a 1995 meeting in Moscow 
with State Department envoy Jonathan Winer, Viktor Melnikov, the Central Bank’s director for foreign 
exchange control, “expressed great concern about the state of the Russian banking system, citing 
estimates that anywhere from 50 to 80 percent of Russian banks were under the control of organized 
crime,” according to a State Department cable. FINCEN director Stanley Morris put it more bluntly: 
“Russia’s banking system is a cesspool.” 

The Mafiya s takeover of Russian banking has been shockingly easy. Since there are no regulatory 
controls over proprietorship, even felons are permitted to own banks. What’s more, there are no 
money laundering laws, regulatory agencies, or depositor insurance. The Russian Central Bank is 
notoriously lax in exercising control over the nation’s nascent financial system — a point some Russian 
central banking officials readily concede. 

“It’s very difficult to tell from the outside what a transaction [with a Russian bank] really means,” 
says the State Department’s Winer. “There are not a lot of public documents. You can’t go to an SEC 



to look at a balance sheet for a Russian firm the way you can in the United States. You can’t go to a 
bank regulator and [find out] what kinds of loans have been made, what the underlying source of 
capital is, or any other number of key issues, let alone who their customers are. 

“These are issues which the Russian Association of Bankers is concerned about, because they are 
not unrelated to the murder of the bankers.” 

More than sixty Russian bankers have been killed by mobsters since 1994 — one for simply having 
refused to make a loan. In a particularly grisly incident, Oleg Kantor, president of Moscow’s 
Yugorsky Bank and a gas and oil mogul, was found outside a luxury hotel on July 20, 1995, with a 
huge hunting knife plunged into his chest in what police called a contract killing connected to his 
bank’s business with a mobbed-up aluminum company. Kantor had been stabbed seventeen times, his 
throat was slit, and his chest slashed vertically in half. Many more bankers have been threatened. The 
deputy superintendent of the New York State Banking Department, Robert H. McCormick, has heard 
stories of Russian bank examiners being chased away from doing their jobs by a hail of gunfire. 

“It’s very frightening,” says Dan Gelber, the former minority chief counsel of the Senate 
Subcommittee on Investigations. “What [do] you do with a bank that from top down is not honest? I 
mean, it almost creates a situation where there is no remedy.” 

Russian banker Alexander Konanikhine was confident that America would provide a safe haven 
from the cruel forces that had dispossessed him If he could make a mint in the motherland, why not in 
the U.S.A., where cunning could also turn dreams into fabulous fortunes? 

Still, the loss of Konanikhine ’s bank in Russia was a severe blow to the financial prodigy. He had 
grown accustomed to the lavish perks of Klondike capitalism. By 1992, he had controlled a Russian 
banking and real estate colossus with some 100 companies; his personal net worth was more than 
$300 million. The anchor of the whiz kid’s financial empire was the All-Russian Exchange Bank, the 
first commercial bank to be granted a government license to operate a hard currency foreign 
exchange. It was also permitted to issue unusual certificates of deposit in the form of specially minted 
sterling silver doubloons, bearing the aquiline profile of Konanikhine ’s wife. “You can’t imagine 
what kind of wealth was produced,” Konanikhine boasted. “By the time I was twenty-three, there 
wasn’t a single hard currency in which I was not a millionaire. I was one of the richest entrepreneurs 
in Russia.” 

Along with a score of other fabulously wealthy young capitalist princes, Konanikhine had helped 
to finance Boris Yeltsin’s successful 1991 presidential campaign. The election victory was followed 
by a failed coup by hard-liners, in which Yeltsin, like Lenin at Finland Station, rallied the masses 
from atop a tank. Fearing the return of totalitarianism and the end of an era that gave them the 
unfettered license to make money, Konanikhine, along with the other new capitalists, increased their 
support for the new president. 

A grateful Yeltsin treated Konanikhine as a favored son, inviting him to join his delegation during 
his first official state visit to America. In addition, Yeltsin bestowed upon him a sprawling state 
residence that once housed Mikhail Gorbachev, as well as the former compound of Soviet World War 
II hero Marshal Zhukov, who led the Red Army into Hitler’s Berlin. Konanikhine also built his own 
showy dacha in a densely wooded area not far from Moscow with eight bedrooms, a private gym, a 
swimming pool, and a twelve-car garage — which hardly accommodated his fleet of sixty 
automobiles. The banker says he was protected around the clock by a praetorian guard of some 250 



veteran KGB security men. 

To protect his companies, Konanikhine claims he hired four KGB officials, including Adeev, 
placing them in top management positions. Later, he asserts, he discovered that the men were secretly 
running a multimillion-dollar money laundering ring through the All-Russian Exchange Bank. It was 
his attempt to fire them, he explains, that resulted in the kidnapping in Budapest, the home base for the 
Red Mafiya s powerful crime lord Semion Mogilevich, whom the FBI believed had joined forces 
with the KGB men to chase Konanikhine out of his banking kingdom. 

But Konanikhine couldn’t easily abandon all that he had worked for in Russia. After arriving in 
the United States, he initiated a furious letter-writing campaign to President Yeltsin and the Russian 
press, bitterly complaining about his abduction and the Mafiya s seizure of his assets. He named 
names and demanded a police investigation. 

His strategy backfired when Adeev filed a criminal complaint with federal prosecutors in Russia, 
charging that Konanikhine had embezzled $3.1 million from the All-Russian Exchange Bank. “ 
[Konanikhine] has a persecution complex,” Adeev told Kommersant, a respected daily business 
newspaper in Moscow. “[He thinks] I am following him and that I want to kill [him]. But in all my 
affairs I follow the principles of economic expediency. And it tells me that this is not to our advantage 
to kill Konanikhine until the time when the bank gets the $3 million back. But as for me, I would not 
give a single dollar for the life of this man.” Adeev’s charges prompted Deputy Prime Minister 
Anatoly Kulikov to declare before the Duma that Konanikhine had actually embezzled an astounding 
$300 million from the bank, and a warrant was issued for his arrest. 

A few months after settling in America, Konanikhine went to work for Menatep Bank, one of the 
largest banks in Russia. According to a 1995 classified CIA report, Menatep was “controlled by one 
of the most powerful crime clans in Moscow,” and that it had set up “an illegal banking operation in 
Washington.” Konanikhine’s boss, Mikhail Khodorovsky, was one of the titans of the Russian 
business world. The thirty-five-year-old tough- talking chairman of Menatep was worth some $2.5 
billion, and enjoyed a spot on the Forbes 200 list of billionaires. Through Menatep, Khodorovsky 
controlled tens of billions of dollars of Russian assets, among them Yukos Oil, the country’s second 
biggest oil company, as well as vast mineral, media, and capital assets — all won, the CIA claimed, by 
trawling the murky shallows of the Russian underworld, a claim Khodorovsky vehemently denies. 

Konanikhine and Khodorovsky had first met in Moscow where they were rival bank moguls. “I 
had a lot of respect for him,” Konanikhine admitted. “He had a lot of respect for me. I wound up here 
in the U.S. with not much to do, and he said: ‘Why don’t you help me turn Menatep into Russia’s first 
international bank? Russian banks don’t have much of a presence in foreign countries. They are very 
domestic.’ We made a lot of research, and I started implementing it.” 

Konanikhine received a $ 1 million employment contract from Menatep, which he claims named 
him the company’s vice president. He soon resumed his lavish lifestyle, quickly acquiring a $3 1 5,000 
condo in the Watergate Complex with a view of the White House, homes in Antigua and Aspen, a 
Mercedes 600SL, and a BMW. 

High on the Russian bankers’ list of objectives, says Konanikhine, was to persuade the Federal 
Reserve to grant Menatep a license to open branch offices in New York and Washington, which 
would enable it to accept American deposits and make loans. Branch offices in the United States, 
with its iron-clad financial system and the respect it had earned in the international community, would 
immediately lend credibility and prestige to any bank, greatly facilitating its business anywhere in the 



world. Attorneys hired by Konanikhine made their case to the Fed, and were turned down 
immediately Menatep subsequently took out full-page ads in the New York Times and the Wall Street 
Journal, hoping to counter its unsavory image. The Russian banking giant also paid $66,000 to PBS’s 
New York affiliate, WNET, to have its name and corporate logo appear in fifteen- second spots before 
and after The MacNeil/Lehrer NewsHour, which ran six times a week for almost a year. 

After finding that opening a branch bank in the United States would be problematic, Konanikhine 
tried to help Menatep set up “false-flag” banks in Austria, England, and Uruguay. “The bank in 
Uruguay was supposed to become the financial bridge between South America and Eastern Europe,” 
Konanikhine explained. 

In was in the Caribbean, however, that Konanikhine had his greatest success. In July 1994, 
Konanikhine and Khodorovsky discreetly founded an Internet bank in Antigua. The European Union 
Bank (EUB) was created, according to the CIA, with a $1 million investment from Menatep. The 
initial company filings in Antigua listed EUB as a subsidiary of Menatep and Konanikhine as the 
bank’s sole shareholder. The Bank of England later informed the Federal Reserve that Konanikhine 
had been in Antigua in 1995, “where he called on government officials to request their cooperation in 
keeping Menatep’s ownership of European Union Bank confidential,” according to a U.S. banking 
document. EUB’s prospects were helped by the fact that Clare Roberts, who became Antigua’s 
attorney general, registered it and was a member of its board. To lend EUB an air of international 
respectability, Lord Benjamin Murkoff, a member of the British House of Lords, was brought on 
board as founding chairman. (Murkoff bailed out when the Bank of England told him there was 
something “dodgy” about EUB.) 

It was no accident that EUB was set up in Antigua, the center for dirty money in the Caribbean. 
Despite its tiny population of 66,000, the island has more than fifty banks, at least eleven of which are 
owned by Russian organized crime, according to the State Department’s Jonathan Winer. The 
country’s officials receive enormous bribes from gangsters willing to pay to operate quietly there. 
“Antiguan officials promise they’re going to clean it up, and as soon as I step on the plane and fly 
back to Washington, they open another mobbed-up bank,” the State Department’s Winer complained. 

In March 1997, the State Department called Antigua the “most vulnerable East Caribbean island to 
money laundering” and a “key transit zone” for drugs smuggled into the United States. 

Touted as the world’s first Internet bank, EUB thrived for a few glorious years. It offered fabulous 
rates on CDs, money wiring services, and credit cards, and quickly became, assert law enforcement 
sources, one of world’s premier money laundering facilities — a kind of crooked bankers’ Stargate, 
where gangsters using secret-coded accounts could hurtle funds around the globe in nanoseconds. Its 
elegantly designed Web site promised super-secrecy so that its cybercustomers could conduct any 
number of transactions, such as laundering funds from fictitious companies, over the Internet. The 
Russian and Colombian cartels allegedly washed millions through the bank before U.S. law 
enforcement officials caught on. More embarrassing still, although EUB’s office was located above a 
noisy bar in Antigua, its computers were operated by Russian techies out of Konanikhine ’s 
advertising agency located in Washington, D.C.’s, courtly Willard Hotel, just blocks from the White 
House. If a crime was being committed, therefore, it was under U.S. jurisdiction. But by the time the 
FBI woke up to the alleged money laundering operation, it had been shut down and the computers, the 
master server codes, and records had been shipped to Canada. 

According to INS documents filed in Virginia, Khodorovsky responded to a Federal Reserve 



inquiry about Konanikhine’s and Menatep’s banking activities by admitting in a letter that 
Konanikhine was authorized “to carry out a study of American and offshore markets” for Menatep. 
Menatep’s lawyers, however, professed minimal involvement in establishing EUB, further stipulating 
in a letter to U.S. banking regulators that while Khodorovsky intended to serve on EUB’s board, he 
and Menatep severed their ties to Konanikhine shortly after EUB was chartered. For his part, 
Konanikhine claims to have sold his shares of the bank before it was shut down and went bad, though 
he refused to say to whom. 

According to Canadian law enforcement officials, however, it was Vitali Papsouev, an eighth- 
grade dropout and the son of a janitor, who bought the holding company. He happens to be one of 
Toronto’s top Russian organized crime figures, according to the RCMP. 

Whatever the truth of the matter, EUB was merely a cog in the Russian mob’s money laundering 
colossus. Congressman Jim Leach, who heads the House Banking Committee, has asserted that 
billions of dollars may have been laundered out of Russia since 1995, and that dozens of Western 
banks have been used as conduits for this money. “Any time that dirty money can find its way into the 
U.S. financial system, it poses a risk to us,” said Jerry Rowe, the IRS’s chief officer of narcotics and 
money laundering. 

The Russian mob’s monstrous growth has been aided considerably by its ability to quickly and 
easily launder its dirty criminal proceeds into clean — and now supposedly counterfeit-proof — U.S. 
hundreds. It is this money that has allowed the Russian dons to swagger into Miami and ratchet up 
prices on the luxury housing market by paying for million-dollar properties with minty new $ 100 
bills, or to setup shell companies in Brighton Beach to sponsor U.S. visas for Russian gangsters, or 
to hire sophisticated money managers and lawyers in Los Angeles and Denver to invest in import- 
export companies. This money “can, in fact, give criminals an opportunity to operate in a legitimate 
arena,” said Rowe, “whether it be in the political arena or buying up businesses. I mean, we could 
end up with those companies in some way supporting political candidates that they think will help 
them in one way or another.” 

In banking, reputation is everything. So when agents of the Criminal Investigation Bureau of the 
New York State Banking Department learned in 1993 that Republic National Bank was selling tens of 
billions of dollars’ worth of federal currency to as many as fifty corrupt Russian banks, they became 
particularly alarmed. “This posed a question to us: if there are legitimate reasons — and there very 
well may be — for this money to be going over to Russia, why is it being sent to entities which have 
been determined, rightfully or wrongly, and I believe rightfully, to be controlled by organized crime?” 
said a source close to the Banking Department’s investigation. “It just didn’t make sense to me. The 
analogy I always use is that it would be like sending money to [John Gotti’s] Bergin Hunt and Fish 
Social Club. Why are we doing that?” 

New York State banking officials were so concerned by these findings, the source said, that they 
urged federal agencies to probe Republic’s banknote trade with Russia. But “right down the line” 
from the FBI to the CIA, “basically, the response that we were getting was, ‘Yeah, it looks like we’ve 
got a potential problem here, but you know what? It’s not our problem’ 

“To us, it was like a sore on Cindy Crawford’s face! I mean, it was there. And I said, ‘Geez, isn’t 
someone curious about how that sore got there?”’ 

If American law enforcement was slow on the uptake, the Russians certainly knew what was going 



on. At the September 1 994 conference in the United States, a Russian general was asked why Russian 
banks were buying billions of dollars in U.S. currency According to a participant at the meeting, he 
chuckled, and said, “’Oh, that’s money laundering.’ Then he went, ‘Hey, we’re being ripped off in our 
country; the money is coming over here, being cleaned, and being brought back [into the United 
States].”’ 

State Department officials explain that money laundering works something like this: Russian 
assets, such as oil, are stolen by underworld figures or corrupt plant managers and sold on the spot 
market in Rotterdam. The proceeds are wired through front companies on the Continent and deposited 
in London banks. Gangsters place an order for, say, $40 million in U.S. currency through a bank in 
Moscow. The bank wires Republic, placing a purchase order for the cash. Republic buys the currency 
from the New York Federal Reserve. Simultaneously, Republic receives a wire transfer for the same 
account from the London bank. Republic pockets a commission and flies the cash from New York to 
Moscow. It is then used by mobsters to buy narcotics or villas, or run political campaigns. 

As far as Republic is concerned, if there was a problem with a customer, it was up to the banks in 
London or Moscow to warn it. According to a provision of the 1992 Annunzio- Wylie Anti-Money 
Laundering Act, American banks are required only to make sure that they’re not knowingly doing 
direct business with criminals or their agents. “All that’s incumbent upon the American bank is to see 
if the other bank is a duly constituted bank, recognized by the central bank of that country,” said the 
New York State Banking Department source. “To me, looking at it as someone who has been in law 
enforcement all my life, do I think maybe we might have some willful blindness here, or blinking, or 
looking the other way? I think so. Can I prove it? No. Republic’s guilty of willful blindness, though 
not in technical violation of any existing law. . .. It may be overly simplistic, but I’ll put it like this: if 
you identify bad guys, and you’re sending money to bad guys, I mean, to me that’s not good!” 

“That money is used to support organized crime; it’s used to support black market operations,” 
agreed an official at the federal Comptroller of the Currency office, which regulates Republic. “In my 
personal opinion, this is an absolute abomination. It should not exist. Yet it appears that at least part 
of the federal government sees nothing wrong with it.” 

One part of the government that has chosen not to address the problem is the U.S. Treasury, which 
stands to gain $99.96 from any $100 bill that leaves the country and never returns. The Federal 
Reserve is similarly, blissfully ignorant. “What do we know of Republic’s customers?” said New 
York Fed spokesman Peter Bakatansky. “We don’t. It’s their responsibility to know who they are 
sending it to.” 

For the record, the Republic National Bank, which made millions from the currency sales, insisted 
it certainly was not knowingly selling $100 bills to mobsters. “That’s my responsibility, to make sure 
we don’t sell to the banks that have organized crime ties,” said Richard Annicharico, one of 
Republic’s compliance officials. “That’s the hardest thing to find. In fact, if you know of any, let me 
know. 

“I’ve run out of places to check,” continued Annicharico, a retired IRS agent. “Someone tells me 
[the banks are corrupt] and gives me substantial reason why — you know, anything, really — we don’t 
sell to them. I mean, anybody who tells us not to, we’ll stop them tomorrow.” 

Asked about a classified CLA report that named ten major Russian banks — among them many 
Republic clients — that are run by organized crime, Annicharico replied, “We looked at that, and we 
stopped doing business with some of those banks as a result of that.” In fact, Annicharico asserted, 



Republic would completely shut down the dollar trade if federal officials ever showed it hard 
evidence that its client banks in Russia are corrupt. “Believe me, I wish they would,” he said. “But 
you have a large faction of the U.S. government that thinks this is great! You have some of the law 
enforcement people who are negative on it. So you have a dual thing.” 

Annicharico acknowledged that a federal money laundering task force had contacted him about 
Republic’s currency trade with Russia. “The task force told me that they think Russian organized 
crime is involved in money laundering. But so what?” he said. “Who? What? Who? No one’s been 
prosecuted. What’s the crime? Tell me — I’ll stop. I always tell them, ‘Tell me which banks, and we’ll 
stop.’ I can’t find them. I’m not being facetious.” 

Despite the number of investigations, high-level meetings, and international conferences that seem 
to involve Republic, Annicharico insisted the bank has never been officially accused of selling money 
to a mobbed-up bank. “No. I never heard that,” he said. “But the innuendo is there because we sell to 
[Russia]. But so what?” 

In the wake of all the attention Republic was attracting concerning its dollar trade with Russia, 
Anne T. Vitale, senior vice president and deputy counsel of Republic National Bank and a former 
assistant U.S. attorney, was assigned by Republic to investigate whether selling cash to banks in the 
former Soviet Union was potentially illegal. She turned to the FBI, to see if they would “give her a 
letter that everything Republic was doing was clean,” according to a former government official. The 
FBI refused, stating that while Republic’s sale of dollars to Russian banks is legal, it “doesn’t pass 
the smell test.” 

Many law enforcement officials were not surprised that it is Republic that became the focus of 
concern regarding these controversial banking practices. “Republic has had a checkered past,” said a 
New York State Banking Department source. “They’ve been a subject of suspicion over the years. . .. 
People have sort of grinned when they heard Republic’s name linked to mobbed-up banks in Russia.” 
Buddy Parker, an assistant U.S. attorney in Atlanta who has prosecuted major money laundering 
cases, said: “Well, let’s say Republic always had some very interesting customers who find the 
government looking at them, more so than maybe other banks. I know that a number of customers of 
Republic Bank have been targets, some of which have been prosecuted, some of which haven’t. ...” 

As for Republic’s dollar trade with mobbed-up banks, former U.S. commissioner of customs 
William von Raab said with characteristic bluntness, “That’s the smell that was always coming off 
Republic.” 

Proclaimed by Institutional Investor to be “perhaps the most successful banking entrepreneur of 
the postwar era,” Republic’s owner, Edmond Saffa, built up a $50 billion global empire while 
amassing a personal fortune exceeding $2 billion. A Lebanese-born Orthodox Jew descended from 
generations of Syrian traders, Saffa was also a financial prodigy. By the age of twenty-one he had 
founded Banco Saffa in Brazil, which became a magnet for Jewish- flight capital from the volatile 
Middle East and later South America. In 1 966, he founded Republic National Bank in New York with 
a scant $11 million in capital and a single branch in a Manhattan brownstone. Republic quickly 
became known on the street as a bank that would send an armored car to pick up large sums from its 
customers with no questions asked. In the 1980s, Republic became the Russian bootleggers’ bank of 
choice, and its suspect client accounts were subpoenaed by federal officials. Although Marat 
Balagula and dozens of other Russians were subsequently convicted of gasoline bootlegging, by then, 



hundreds of millions of dollars of illicit bootleg money was already flowing through the U.S. banking 
system, having been washed through a welter of shell companies. 

The bank grew rapidly and became the twentieth largest in the United States, with assets of $50.4 
billion and some seventy branches in New York, California, and Florida. An arm of Safra’s Geneva- 
based Trade Development Bank (TDB), Republic had a net income for the nine months ending 
September 30, 1998, of $143 million, though it lost a staggering $190.7 million on Russian securities 
trading. 

Safra specialized in niches that most other banks eschew, such as trading gold and banknotes. 
Though Republic’s commission on banknote sales was not publicly divulged, “it’s always 
profitable,” Safra once told Institutional Investor. According to Charles Peabody, a banking analyst 
at UBS Securities, this kind of trade became “increasingly significant” to Republic’s revenue stream. 
“It’s a volume business, and it ties into the relationships they have with the central banks of the 
world. . . and I think Republic does have good relationships with the central banks of the world, 
probably built up through their gold-trading operation.” Republic controlled more than 95 percent of 
banknote sales to Russia. 

In the mid-1980s, Safra became the victim of a smear campaign orchestrated by American 
Express, which had bought Republic’s Swiss parent, TDB, for $520 million in 1983. (Safra regained 
control of TDB five years later.) American Express hired a convicted felon to spread false stories in 
the international press depicting Safra as an unscrupulous operator involved in everything from the 
Iran-contra scandal to money laundering. Safra successfully sued two newspapers in France for libel 
and eventually won a public apology from American Express and $8 million, which he donated to 
four charities, including the International Red Cross and the Anti-Defamation League. Though Safra 
was stung by the accusations, they helped to inoculate his bank against subsequent money laundering 
allegations that were the result of legitimate law enforcement inquiries, as well as to scare away 
reporters. 

Ironically, at around the same time American Express was disseminating these malicious 
falsehoods, the DEA, Customs, and the Swiss police had begun investigating Safra’s banks in 
Switzerland and New York for laundering Colombian and Turkish drug money. “I can say on the 
record that the sense I got from the Customs agent with respect to Republic was that they were 
concerned about its activities,” said William von Raab, the U.S. commissioner of customs from 1981 
to 1989. (Despised by the banking industry for his outspokenness, von Raab had accused bankers at a 
1982 conference in Miami of knowingly washing cartel drug money, shouting, “I am ashamed of all of 
you. You and your banks are engaging in sleaze!” A few years later, the crusading von Raab helped 
draft America’s first money laundering law.) 

Investigators had first been led to look into Republic’s business through a bizarre set of 
circumstances. On Thanksgiving Day 1987, two Armenian brothers arranged to fly from Los Angeles 
to Zurich on KLM, having checked their baggage through to Zurich on Pan Am. “The Pan Am people 
were panicky about a bomb,” Greg Passic, then a DEA supervisor and now with FINCEN, revealed. 
“The bomb squad put the suitcase in one of those blast containers, and exploded it, and $2.2 million 
went flying out of the thing.” 

The suitcases were addressed to the Magharian brothers, who were major currency traders. They 
had been depositing drug money into Shakarchi Trading company of Zurich, which in turn had 
allegedly been wiring it, as well as the funds of many other drug dealers, into account number 



606347712 at Republic. According to Newsday, the account was “the junction of two major 
narcotics-money-laundering investigations spanning four continents.” Customs agents were convinced 
that Republic was complicit. “The agents were really, really down on Republic,” a top-level Customs 
source says. “I think they just felt it was a rotten bank.” 

A classified DEA investigative report prepared by a field agent in Bern, Switzerland, and 
approved by the DEA’s Passic, dated January 16, 1988, described the link between Shakarchi, Safra, 
and Republic: “Shakarchi Trading company of Zurich, Switzerland, operates as a currency exchange 
company and is utilized by some of the world’s largest trafficking organizations to launder the 
proceeds of their drug- trafficking activities. Its director, Mohammed Shakarchi, has been closely 
associated with the heads of these criminal organizations and assists those criminal organizations. 

“Shakarchi Trading maintains accounts at the Republic National Bank of New York, a bank which 
has surfaced in several previous money laundering investigations. 

“While he was alive, Mahomoud Shakarchi (Mohammed’s father) maintained a close relationship 
with Edmond Saffa, owner of the Safra Bank and founder of the Trade Development Bank as well as 
owner of approximately 38 percent of the stock in Republic National Bank of New York. All of those 
banks surfaced in Mahomoud Sharkachi’s alleged drug laundering activities.” 

In March 1989, the Magharians were indicted in Los Angeles for money laundering; two years 
later, Shakarchi ’s records were subpoenaed by Swiss and American police, who also confiscated 
Shakarchi’s account at Republic, through which more than $800 million had passed over a five-year 
period. Neither Republic nor Safra nor Shakarchi was indicted, though Shakarchi later told Israeli 
journalist Rachel Ehrenfeld that he was convinced that the DEA was going after him to get him to 
testify against Safra. 

The case against Shakarchi was quietly dropped in 1990, after the U.S. attorney for the Eastern 
District in New York concluded that there wasn’t enough evidence to prove the money in the Republic 
account consisted of drug proceeds, said Robert Cozzolina, deputy special agent in charge of the U.S. 
Customs Service in Manhattan. Ehrenfeld, who investigated the case, alleged in her 1992 book Evil 
Money that a corrupt U.S. government official purposely inserted errors in the subpoena so that 
Shakarchi’s attorneys could easily quash it and stop the investigation. To this day, Passic says he 
believes Shakarchi Trading was knowingly doing business with drug traffickers. Customs agents who 
have investigated Safra preferred not to talk about him because of his power. “If you go after 
somebody like Safra, you had better dot every i and cross every t,” asserted one of the Customs 
agents who worked the Shakarchi case. 

Although Republic had become a convenient fulcrum to help U.S. policymakers deal with Russia, 
by supporting its economy with the sale of badly needed dollars, many officials in both law 
enforcement and the Treasury Department privately worried that their dollar trade was funding the 
mob and not a needy ally. Officially, the Treasury and the Fed back the sale of U.S. dollars to Russian 
banks, arguing that market forces and geopolitics — and not the priorities of law enforcement — should 
drive the trade. At a high-level meeting of Fed and Treasury officials convened in Washington in 
1995, specifically to discuss the huge dollar sales by Republic to Russia, Fed officials defended the 
practice, insisting that, other than through direct loans, it was the best way to bulk up the sagging ruble 
and help Russia enter the global free market, according to one participant. 

When one official at the meeting suggested that Republic might, in fact, be doing business with 



banks controlled by organized crime, another vigorously defended the institution, saying that it did a 
tremendous amount of due diligence to make sure that Russian banks were legitimately operated. 

“And that in itself is a big laugh,” said the participant. “There is no possible way for anybody to 
conduct due diligence on a Russian bank. There were people there from the Fed who have no 
common sense at all.” 

The dissent in the government reaches all the way to the Comptroller of the Currency’s office. 
When one senior official there was asked about Republic’s dollar trade, he replied, “What I 
understand is that they are aiding in organized crime activities out of the former Soviet Union through 
their so-called correspondent bank relationships.” 

Indeed, an interagency federal task force on economic crime made a preliminary finding that 
Republic’s dollar trade with Russia was consistent with money laundering, according to the 
Comptroller of the Currency source and another investigator with knowledge of Republic’s activities. 
Drafts of working papers prepared by task force analysts stated this finding, but the charges were 
“tempered substantially” in the final drafts that went to senior policy-makers, said the official. 

Although the early versions of the drafts did not explicitly use the term money laundering, “they 
indicate that the volume of new money being transferred out of Republic Bank into Russia is beyond 
that which is needed to support the normal use of U.S. dollars in the former Soviet Union, and that a 
further study needs to be made as to the actual use of those funds,” said the Comptroller of the 
Currency official. But then the individuals who are in charge of researching all that state that this is, 
in fact, used to support the black market and organized crime. But that does not appear [in] the final 
report that is submitted to the policy-makers.” 

So far the most vigorous government action that has been taken regarding mobbed-up Russian 
banks has come at the state level in New York. “We frankly have had a number of expressions of 
interest from Russian banking institutions,” said Robert H. McCormick. However, McCormick said, 
“There is a whole potpourri of problems connected with the Russian banks, [including] money 
laundering activity and underworld connections. So we generally discourage Russian banks from 
applying for branch or agency licenses.” Because of strict state and federal licensing standards, only 
a few Russian banks have applied for even representative office status in New York, which would 
allow them to conduct public relations work, but not operate as banks; other Russian banks backed 
off, after learning they would have to submit to a rigorous investigation by the state and the Fed’s 
board of governors. “We have to be concerned about the competence of the people running the bank, 
their experience, their background,” said McCormick, “and sometimes when we check that very 
briefly, the news is not good.” - 

In 1992, Stolichny Bank, then one of Russia’s five largest private financial institutions and a major 
recipient of cash from Republic, met with New York’s banking officials to inquire about obtaining a 
charter. After being discouraged, it never followed up with an application. Stolichny has been 
identified in a classified CIA report as a front for organized crime; the respected Austrian 
newsweekly Wirtschafts Woche has cited police records that alleged Stolichny’s owner, Alexander 
Smolensky, was an international drug dealer in the top echelon of the Russian Mafiya. Two other 
allegedly mob-linked banks that bought cash from Republic — Inkombank and Promstroybank — also 
submitted New York applications. Promstroybank’s license to open a representative office was 
approved by the State Banking Department in June 1995, and later by the Fed. Inkombank’s April 24, 
1995, application failed to pass either agency, and in October 1998 its license was revoked by the 


Central Bank of Russia for its inability to honor its loan obligations. The bank collapsed amid 
allegations that Russian underworld figures looted accounts and used the banks to launder dirty 
money “Why is it that there are so few Russian banks that operate in New York?” asked the Banking 
Department source. “The primary reason is that none of them are trusted.” 

But Russian mobsters have found a way around regulators. Instead of trying to bring Russian banks 
to the United States, they are buying stakes in privately held banks across the nation. Officials in 
California, for instance, are investigating the Russian mob’s penetration of the state’s privately held 
banks. As long as their investment remains under 10 percent, the mobsters do not have to file financial 
disclosure statements to the state or federal government. In some cases, several Russians acting in 
concert have allegedly bought sizable shares of California banks. 

Although combating money laundering may have been stated to be a top priority of the Clinton 
administration, it’s virtually impossible to stop. There are about 700,000 wire transfers a day, 
totaling $2 trillion. Some $300 million of that — less than one sixtieth of one percent — represents 
laundered funds, which are hidden by the huge volume of legitimate transfers, said a September 1995 
report by the Office of Technology Assessment. The report concluded that no existing technology is 
capable of identifying all but the most obvious trade anomalies. “There is no way you can program 
the system to say, ‘I want you out of these 700,000 transfers to look for [dirty] banks,” said Rayburn 
Hesse, a State Department senior policy adviser who chairs a federal task force on money laundering. 
“The result is that we have an international banking system that knows no horizons. It operates around 
the clock. Our laws, however, know horizons called national boundaries.” By 1999, law enforcement 
officials estimated that between $500 billion and $1.5 trillion (or 5 percent of the world’s gross 
product) was being laundered every year. 

No one in government with even rudimentary knowledge about Russian organized crime doubts 
that it has penetrated the international banking system. Many insist that selling dollars to mobbed-up 
Russian banks is morally indefensible, regardless of whether the trade is sanctioned by the Federal 
Reserve. Equally, they believe that if the dollars are bought with wired funds derived from asset- 
stripping, narcotics, stolen U.S. aid, or the black market sale of arms or nuclear materials, then the 
transaction should be considered money laundering. “Even though you can’t fault Republic as to the 
current interpretation of the law, it doesn’t necessarily mean that it’s legal,” said a Treasury source. 

“It just means that some of the questions that you ask [are] ahead of where we have gotten,” adds 
the State Department’s Winer. “We are grappling with it. We are trying to put it together. But all of this 
has happened very quickly, and it’s taking us some time to get adequate answers.” 

As part of that effort, the Treasury has helped the Russian Central Bank draft money laundering 
laws. But the legislation has stalled the Russian parliament, which has dozens of convicted criminals 
among its members. 

Meanwhile, Russia’s lawlessness has become so rampant that it has virtually capsized the 
country’s banking system. In November 1998, Andrei Kozlov, the Russian Central Bank’s deputy 
chairman, announced that mobbed-up banks had stolen Western government loans and aid, 
contributing to the meltdown of Russia’s economy in August 1998, and leading to the insolvency of 
about one half of Russia’s remaining 1,500 commercial banks. Menatep, for one, became insolvent 
and lost its license. Audit Chamber, a Russian government budgetary watchdog, and the Prosecutor 
General’s office charged that Central Bank officials had made off with as much as $9 billion loaned 



to Russia by the World Bank and the International Monetary Fund. The looting had allegedly begun as 
early as 1992, but Central Bank officials and well-connected investors used the financial crisis of 
1 998 as an opportunity to seize even more funds, once they knew the ruble was about to be devalued. 
Amid the accusations, Central Bank chief Sergei Dubinin resigned. While denying any wrongdoing, 
he tried to quash the investigation, which is looking into allegations that he personally had stashed 
huge amounts of cash in Cypriot accounts. In September 1998, former deputy prime minister Anatoly 
Chubais admitted to the Kommersant Daily that he “conned” the International Monetary Fund out of 
more than $20 billion when he lied about the true state of Russia’s ailing economy. 

Meanwhile, Alexander Konanikhine’s story continues to unfold. In June 1996, dozens of FBI and 
INS agents, accompanied by two ill-mannered Russian prosecutors, barged into Konanikhine’s condo 
at the Watergate to arrest him and his wife for visa fraud. At a press conference shortly thereafter, the 
government announced that it had captured a dangerous international fugitive, who had bilked his 
bank in Russia out of $300 million. “We lived in the Watergate for three years,” Konanikhine told me. 
“The building is full of Secret Service men, who protect all the politicians like Bob Dole who live 
there. It is the least likely place in the world for an international fugitive to hide. From my balcony, I 
can see the White House roof. It would be a hell of a place to start shooting. I was one of the few 
businessmen who tried to confront the Mafiya even before it was a serious problem. Then I’m 
declared an international money launderer, an international fugitive. If you want to find a crook, all 
you have to do is knock on any door of the Watergate. I hate the fact that the Mafiya is in control of my 
country.” 

Konanikhine was placed into an INS jail in Winchester, Virginia, without bail; his wife was 
released on her own recognizance, pending the ruling on their deportation hearing by an INS judge. 
The couple applied for political asylum, arguing that Russian bankers as a social class were being 
persecuted by the Russian mob. 

Federal authorities argued during Konanikhine’s INS case that the mob had used the All-Russian 
Exchange Bank to launder billions of dollars, and that despite Konanikhine’s vehement denials, it was 
implausible that he didn’t knowingly participate in the scheme — especially given how brilliant, 
meticulous, and controlling he is. 

They further argued that, from the moment he arrived in America, he laundered money for the 
Russian Mafiya through EUB. The evidence for that, wrote the federal prosecutor in the government’s 
closing argument against Konanikhine, was “clear, compelling and uncontroverted.” Indeed, three of 
Konanikhine’s own expert witnesses testified that, in all likelihood, he is a skilled money launderer. 
No less of a money laundering expert than Jack Blum said that EUB “was a criminal fraud,” and that 
it was highly probable that Konanikhine was aware of the Mafiya s ties to the institution. Seen in this 
light, said the prosecutor, the conflict between Konanikhine and his mobbed-up KGB comrades and 
ex-business partners in Moscow was nothing more than a falling out among thieves. 

Miraculously, Konanikhine won his case for asylum on appeal, becoming the first Russian since 
the end of the Cold War to do so. He also succeeded in persuading the judge that the INS and the 
Russian prosecutors had fabricated evidence against him as part of a quid pro quo that the FBI had 
entered into for help on the Ivankov case. In fact, the Russians threatened to close the FBI’s office in 
Moscow unless the bureau handed Konanikhine over, according to memos sent from the FBI’s field 
office in Moscow to Washington. The Justice Department’s Office of Professional Responsibility is 
looking into the charges of misconduct by the INS and the FBI. Konanikhine, however, is now under 



investigation by the feds — for money laundering, a charge he denies. The Justice Department is also 
appealing the INS judge’s decision to grant him asylum. 

Yet the banking wizard is still bullish about his future in America. Grinning over a fruit plate at the 
Waldorf-Astoria hotel in Ma nha ttan in 1999, he boasted that his new advertising firm was doing 
landmark business. “In a year,” Konanikhine crowed, “HI be a billionaire again.” 



10 


THF, WORT, P’S MOST DANCEROTIS CANCSTFR 


Outside the small town of Ricany, near Prague, are two picturesque villas, an improbable setting for 
one of the most dreaded mob families in the world to savagely murder its victims. The mob’s young 
enforcers, trained by veterans of the Afghanistan war, are infamous for their brutality. Their quarry, 
usually businessmen who have balked at extortion demands, are stabbed, tortured, and mutilated 
before being butchered. The carnage is so hideous that it has succeeded in frightening even the 
competing crime groups in the area. 

The torture chambers are run by what international police officials call the Red Mafiya, a 
notorious Russian mob group that in only six years has become a nefarious global crime cartel. 

The enigmatic leader of the Red Mafiya is a fifty- four-year-old Ukrainian-born Jew named 
Semion Mogilevich. Known as “the Brainy Don,” he holds an economics degree from the University 
of Lvov. But hundreds of pages of classified FBI, British, and Israeli intelligence documents, as well 
as statements by a key criminal associate and dozens of law enforcement sources in the U.S. and 
abroad, describe him as a malevolent figure who has become a grave threat to the stability of Israel, 
Eastern Europe, and North America. 

“He’s the most powerful mobster in the world,” crowed Monya Elson, who is listed in the 
classified documents as one of Mogilevich’ s closest associates and partners in prostitution and money 
laundering rings. “You can’t imagine what kind of power this guy has. He has more power than 
Yeltsin.” 

When Elson was forced to flee Brighton Beach, it was Mogilevich who spirited him out of the 
country and set him up in a massive money laundering scheme in Fano, Italy. “If I tell on Mogilevich, 
Interpol will give me $20 million,” boasted Elson, who as of March 2000 was still awaiting trial. “I 
lived with him. I’m his partner, don’t forget. We are very, very close friends. I don’t mean close, I 
mean very, very close. He’s my best friend.” Nevertheless, the irrepressible Elson ultimately 
co nfi rmed some of the details about Mogilevich contained in the classified FBI, British, and Israeli 
reports, which extensively detail the full array of Mogilevich’ s criminal activities: he traffics in 
nuclear materials, drugs, prostitutes, precious gems, and stolen art. His contract hit squads operate 
freely in the United States and Europe. He controls everything that goes in and out of Moscow’s 
Sheremetyevo International Airport, which is a “smugglers’ paradise,” according to Elson. 

There is apparently no deal that the godfather of the Red Mafiya considers beneath consideration. 
An FBI informant told the bureau that one of Mogilevich’ s chief lieutenants in Los Angeles met two 
Russians from New York City with Genovese crime family ties to broker a scheme to dump American 
toxic waste in Russia. Mogilevich’s man from L. A. said the Red Mafiya would dispose of the 


material in the Chernobyl region, “probably through payoffs to the decontamination authorities there,” 
stated a classified FBI report. 

Mogilevich represents a novel and especially fearsome variety of Russian gangster, the prototype 
don of the new mille nni um. He has created a global communications network through secure satellite 
telephones, cellular clone phones, encrypted fax machines, e-mail systems, and state-of-the-art 
computers, all of which are conducted by a host of Ph.D.’s he employs. Relaxed travel restrictions 
and the greatly increased volume of international trade have enabled Mogilevich to extend his 
operations throughout the world, setting up a welter of legal and illegal companies that have helped 
him to penetrate international banking systems and stock exchanges, where he has planted top aides. 
He is protected by a web of relationships with high-ranking officials of international security 
services, highflying financiers, and politicians. His licit and illicit concerns are administered by loyal 
white-collar managers and dozens of “soldiers,” who “take care of all his business so that he himself 
keeps his hands clean and has no criminal record,” says a classified Israeli intelligence report. He 
has built a highly structured criminal organization in the mode of a “classic” American Mafia family 
in which blood ties bind central figures: many of the organization’s three hundred core members are 
his relatives, mistresses, and in-laws. The organization has a defined chain of command, with 
selected individuals within the group appointed to manage specific criminal activities, such as 
weapons trafficking or prostitution, while others are responsible for particular geographical regions. 
His strong leadership qualities, his acute financial skills, his talented associates, and his political 
connections have effectively made the Brainy Don impervious to prosecution. 

Mogilevich, who is bald, weighs nearly three hundred pounds, and favors florid shirts and 
luminous pinky rings, was first exposed to the world at large in a profile I wrote that appeared in The 
Village Voice on May 26, 1998. He became internationally notorious, however, when federal 
authorities accused him of perpetrating the biggest money laundering scheme in U.S. history, washing 
an astonishing $7 billion through the venerable Bank of New York. In the media storm that followed, 
Mogilevich denied the allegations, telling a Hungarian news magazine that he just couldn’t understand 
why he was being accused of such heinous crimes, since he is, after all, nothing more than a humble 
grain merchant. The only money he ever laundered, he quipped, was a five-dollar bill that he forgot to 
retrieve from his shirt pocket before it went to the cleaners. 

Little is known about Semion Mogilevich’s early years. He was born in Kiev and his mother was 
a podiatrist and his father the manager of a large state-owned printing company. Legend has it that as 
a young man, he ran a small fruit stand in Moscow, despite the Soviet Union’s strict laws against 
private enterprise. Soviet authorities first learned of his criminal activities in the early 1970s, when 
he was a member of the Ly ubertskaya crime group, which operated in the Moscow suburb of the 
same name. He was involved in petty theft and counterfeiting, and was later convicted for illegal 
currency speculation in Ukraine, for which he spent eighteen months in prison. A few years later, he 
was again arrested for dealing currency on the black market, and received a four-year prison term. 

But Mogilevich made his first millions fleecing fellow Jews. In the mid-1980s, when tens of 
thousands of Jewish refugees were hurriedly emigrating to Israel and America, Mogilevich made 
deals to cheaply buy their assets — rubles, furniture, and art — with the promise of exchanging the 
goods for fair market value and sending refugees the proceeds in hard currency. Instead, he simply 
made the sales and kept the considerable profits. 



In early 1990, Mogilevich fled Moscow, as did many other dons, to avoid the gangland wars that 
were then roiling the capital. With his top henchmen he settled in Israel, where they received 
citizenship. In Israel, which does not extradite its citizens, Mogilevich kept a low profile, preferring 
to maintain the Jewish state as a place where he could move without restriction, rest, or find refuge in 
times of trouble, according to an Israeli intelligence report. Yet he “succeeded in building a 
bridgehead in Israel” and took “advantage of his Israeli citizenship and Jewishness, that allows him 
to travel freely in and out of that country,” says the report. 

Keeping a low profile did not, however, preclude “developing significant and influential 
[political and business] ties,” according to the report. He forged contacts with Russian and Israeli 
criminals, and maintained control of several businesses through proxies, such as an international 
kosher catering service, a tourism company, and a real estate firm. “Since 1991 he has opened bank 
accounts in Israel in the names of various companies, and has attended gatherings in Israel with other 
known criminals,” revealed the Israeli report. In addition, an Israeli bank, with branches in Moscow, 
Cyprus, and Tel Aviv, was “allegedly owned by Mogilevich, who is reportedly laundering money for 
Colombian and Russian Organized Crime groups,” according to a classified FBI document. 
Mogilevich also unsuccessfully tried to gain control of the giant kosher distillery Carmel Mizrachi, 
according to Israeli intelligence. 

Mogilevich, however, became disenchanted with living in Israel. “There are too many Jews in 
Israel,” he told the National Post of Canada. “Too much arguing. Everybody is talking all the time 
and their voices are so loud.” In 1991, Mogilevich married KatalinPapp, a Hungarian national, a 
union that allowed him to legally reside in Budapest, where he moved and began to build the 
foundations of his global criminal empire. He bought a string of nightclubs called the Black and White 
Clubs — with locations in Prague, Budapest, Riga, and Kiev — that became one of the world’s 
foremost centers of prostitution. Mogilevich primarily used German and Russian women in these 
venues, providing cover jobs for them as well as bodyguards. In 1992, he cemented his ties to other 
Russian and Eurasian organized crime groups by selling partnerships in the prostitution business to 
the Solntsevskaya and Ivankov organizations. Monya Elson was also a partner, according to his own 
admission and classified FBI documents. The Black and White Club in Budapest became the hub of 
Mogilevich’s worldwide operations, and he added a casino in Moscow and nightclubs in Eastern 
Europe as a way to account for the excessively high cash inflow from his criminal activities. 

Mogilevich also fortified his organization by coordinating activities with non- Russian crime 
groups such as the Japanese Yakuza and the Italian Camorra. His mutually beneficial relationship with 
the Camorra, arguably the cleverest, most cunning, and most violent of the four Mafia families in Italy, 
gave him much cachet in the underworld. In one oft-repeated swindle, the Italians passed counterfeit 
American hundred-dollar bills (which had been made from bleached one-dollar bills) to the wily 
Russians, who passed the fake currency from their bases in dozens of countries. In turn, Mogilevich 
provided the Camorra with large quantities of synthetic narcotics along with expert money laundering 
services to wash the profits. The close ties between Mogilevich and Italian Camorra strongman 
Salvatore DeFalco particulary unsettled law enforcement authorities as they watched the Italian and 
the Eurasian crime bosses venture into new frontiers. The Italian authorities surveilled Camorra 
members operating in the Czech Republic in concert with Mogilevich, where they primarily trafficked 
in weapons. Meanwhile, Mogilevich made staggering sums smuggling huge amounts of cocaine and 
heroin into Russia from the United States and Canada. “The profits were then introduced into the 



banking system and moved across the world via the UK,” states a confidential British intelligence 
report. Mogilevich even bought a bankrupt airline in the Central Asian former Soviet republic of 
Georgia for millions of dollars in cash so that he could ship heroin out of the Golden Triangle into 
Europe. Some of the drugs were to be allegedly smuggled into England by sea, says an Israeli 
intelligence report. 

Mogilevich’s organization was augmented dramatically with the creation of layer upon layer of 
sham companies that spanned every conceivable business. He had already established two such 
businesses in Alderney, one of the Channel Islands, which are well known as tax havens. One, Arbat 
International, was a petroleum import-export company, of which Mogilevich owned 50 percent. His 
friend Ivankov held a quarter share of the company. Mogilevich’s other partners in Arbat — who 
jointly had a 25 percent share — were Solntsevskaya crime lords Sergei Mikhailov and Viktor Averin. 

The other, a holding company called Arigon Ltd., became the heart of his criminal empire. 

Initially, it had seven investors; each owned approximately 14 percent of the stock, which cost one 
pound sterling. The Budapest branch of Arigon was allegedly managed by the wife of Solntsevskaya 
kingpin Sergei Mikhailov, according to Israeli intelligence. 

Mogilevich was particularly intrigued by art fraud, and in early 1993 reached an agreement with 
the leaders of the Solntsevskaya crime family to invest huge sums of money in a joint venture: 
acquiring a jewelry business in Moscow and Budapest. According to classified FBI documents, the 
company was to serve as a front for the acquisition of jewelry, antiques, and art that the 
Solntsevskaya mob had stolen from churches and museums in Russia, including the Hermitage in St. 
Petersburg. The gangsters also robbed the homes of art collectors and even broke into synagogues in 
Germany and Eastern Europe to steal rare religious books and Torahs. 

In another joint venture with the Solntsevskaya gang, Mogilevich purchased a large jewelry 
factory in Budapest where Russian antiques, such as Faberge eggs, were sent for “restoration.” 
Mogilevich’s men shipped the genuine Faberge eggs to an unwitting Sotheby’s auction house in 
London for sale, and then sent counterfeits as well as other “restored” objects back to their original 
owners in Moscow. 

Mogilevich also acquired a giant vodka plant in Russia and a plant for manufacturing hard liquor 
in Hungary, which he used to become a major smuggler of alcohol, claims a secret Israeli intelligence 
report. In 1995 alone, he smuggled 643,000 gallons of vodka out of Hungary. On May 5, 1995, twelve 
railroad cars filled with Mogilevich’s vodka were seized by Hungarian authorities as he tried to slip 
the hooch past customs without paying duty. 

More ominously, Mogilevich set his sights on the arms industry. He had already sold $20 million 
worth of pilfered Warsaw Pact weapons, including ground-to-air missiles and twelve armored troop 
carriers, to Iran, according to the classified Israeli and FBI documents, and a top-level U.S. Customs 
official. However, to the even greater consternation of international law enforcement officials, 
Mogilevich began to legally purchase virtually the entire Hungarian armaments industry, jeopardizing 
regional security, NATO, and the war against terrorism. The companies he bought include: 

• Magnex 2000, a giant magnet manufacturer in Budapest. Solntsevskaya crime boss Sergei 
Mikhailov allegedly served as its deputy director, asserts Israeli intelligence. 

• Army Co-op, a mortar and antiaircraft gun factory. Army Co-op was established in 1991 by two 
Hungarian nationals, both in the local arms industry, who were looking for a partner. Mogilevich 
bought 95 percent of Army Co-op through Arigon Ltd., which also deals extensively with Ukraine, 



selling oil products to the Ukrainian railway administration. 

• Digep General Machine Works, an artillery shell, mortar, and fire equipment manufacturer. 
Mogilevich financed the company with a $3.8 million loan from the London branch of Banque 
Frangaise De L’orean. The loan was secured by the Mogilevich-controlled company Balchug, which 
manufactures and sells office furniture. 

In 1994, Mogilevich purchased a license permitting him to buy and sell weapons through Army 
Co-op and other Hungarian arms companies, which established him as a legitimate armaments 
manufacturer. A Mogilevich company participated in at least one arms exhibition in the United States, 
where it displayed mortars modified by Israel. 

Like mob bosses everywhere, Mogilevich would have been unable to sustain the growth of his 
empire without police and political confederates. In Europe and Russia, the “corruption of police and 
public officials has been part of the Semion Mogilevich Organization’s modus operandi,” says a 
classified FBI document. In Hungary, two former policemen serve as security coordinators for the 
Red Mafiya s formidable combat brigades. “When his back is up against the wall, he’s got a very 
effective bodyguard force that keeps him alive,” says former FBI agent Robert Levinson. 
Mogilevich’s lieutenants are trained in intelligence operations and countersurveillance, and provide 
warnings of impending police actions against the organization. Law officers in Hungary and 
elsewhere keep him apprised of police efforts to penetrate his organization. 

“He also ingratiates himself with the police by providing information on other [Russian crime] 
groups’ activities, thus appearing to be a cooperative good citizen,” a classified FBI report asserts. 

In fact, Mogilevich has used precisely that ploy to compromise other European intelligence 
services. On April 28, 1998, the German national television network ZDF reported that the BND (the 
German intelligence agency) had entered into a secret contract with Mogilevich to supply information 
on rival Russian mob groups. The charges were made by several sources, including Pierre Delilez, a 
highly regarded Belgian police investigator who specializes in Russian organized crime. If the 
television report is accurate, one possible motive for BND’s deal, believes a U.S. law enforcement 
expert on the Russian mob, is that the Germans faced an intelligence gap after having “pulled their 
people out of Moscow in 1998 because they didn’t like the level of cooperation they were getting 
from the Russian authorities on the Russian mob.” Because of the deal with the BND, police in 
Belgium, Germany, and Austria have complained that it is now impossible to investigate the Brainy 
Don. 

Mogilevich also developed substantial and well-concealed political connections, particularly in 
Israel, according to reports by Israeli intelligence, which notes the mysterious and unexplained 
disappearance of Mogilevich’s Ministry of Interior file. In Brussels, Mogilevich’s man Anatoly 
Katric, a Ukrainian-born Israeli citizen who spent much of his time entertaining international 
diplomats for the Red Mafiya, approached Philip Rosenberg, the head of the far-right, amt-immigrant 
National Front Party, which held 5 percent of the seats in the Brussels parliament. Katric offered 
Rosenberg 3 billion Belgian francs to obtain Mogilevich Belgian citizenship. Rosenberg allegedly 
agreed, but was indicted on corruption charges and fled to Papaya, Thailand, before the deal could be 
consummated. Investigators found suspected bribe money in a Swiss bank account, which Katric 
ultimately admitted to the Belgian police came from Mogilevich. 

In France, Mogilevich approached Alferd Cahen, a recently retired high-ranking Belgian diplomat 
who had been ambassador to the Belgian Congo and France. Cahen had just been named secretary of 



the North Atlantic Treaty Association, the lobby group for NATO in Paris. Mogilevich, banned from 
entering France, wanted Cahen to arrange a meeting with French intelligence so he could propose 
passing political and gangland information to them in exchange for surreptitious access to the country 
Cahen agreed to make the introductions, and both sides were apparently satisfied with the results, 
said Pierre Deliiez. A disturbed Deliiez had warned French intelligence against working with the 
mobster, for, “The more that these agencies use Mogilevich’s services, the more trouble it will be to 
prosecute him.” Cahen himself wasn’t prosecuted, as there was no proof that money had changed 
hands, although investigators later found $1 80,000 in a bank account belonging to Cahen’s son, which 
they suspected came from Mogilevich. 

Extending his operations from his base in Budapest, Mogilevich had, in just a few years, forged a 
far-flung criminal empire with thousands of employees and an unprecedented reach from Great 
Britain to New Zealand. He had taken over all the black markets from the former Soviet republics 
through the Czech Republic, cornered the legal and illegal weapons market, and trafficked tons of 
drugs and precious stones, said a December 1994 British intelligence report. 

Mogilevich has also sent contract hit teams throughout the world, including the United States, 
where the assassins arrive from Russia under tourist visas arranged by Vladimir Berkovich, the 
owner of the Palm Terrace restaurant, a watering hole for Russian gangsters in Los Angeles. 
Berkovich also supplied the mobsters with weapons and arranged for their return to Russia, 
according to a classified FBI document. (Berkovich said the government’s charges are “total 
bullshit.”) - 

* * * 

Mogilevich’s spectacular invasion of the North American financial markets began in 1993. That 
year, a company called YBM Magnex International in Newtown, Pennsylvania, was infused with 
some $30 million from Arigon Ltd. By then, the Brainy Don had already set up dozens of shell 
companies in the United States to launder proceeds obtained from criminal activities. Typically, many 
of the “businesses” were located in the residences of organization members. Numerous wire transfers 
of funds from Arigon Ltd. and other Mogilevich accounts overseas were transferred to these entities 
in amounts ranging from under $10,000 to more than $1 million. 

But Mogilevich had particularly grand plans for YBM, which was merged with Magnex 2000, his 
Hungarian company that sold industrial magnets and military hardware. He appointed his brilliant, 
trusted, childhood friend and adviser Igor Fisherman as YBM’s chief operating officer. Fisherman, 
who lived in Budapest, served as the coordinator of Mogilevich’s criminal activities in Ukraine, 
Russia, the United States, the United Kingdom, the Czech Republic, and Hungary, according to FBI 
documents. A trained mathematician, Fisherman had once been a consultant to Chase Manhattan Bank 
in New York City. 

Mogilevich and Fisherman discovered a fact that Canadian financial criminals had long known — 
the poorly regulated Canadian stock exchange was a convenient entry point into the North American 
markets, one where the mob’s substantial funds could be hidden under the umbrella of a publicly held 
company. Mogilevich chose Jacob Bogatin, a fifty-one-year-old professor of physical metallurgy, to 
prepare a public stock offering for YBM. Born in Saratov, Russia, Bogatin, YBM’s group vice 
president, and the company’s largest initial shareholder, had served on the board of Arbat and 
Magnex in Budapest. - 


Under the watchful eye of Mogilevich and Fisherman, Jacob Bogatin traveled to northern Canada 
in 1995 to initiate the YBM plot by creating a legal shell company on the Alberta Stock Exchange. 
Christened Pratecs Technologies Inc., the company was a blind pool, or a business without assets. 
Blind pools are given eighteen months to come up with a major acquisition to capitalize themselves, 
otherwise they are delisted. Pratecs then began the process of acquiring YBM, which had already 
purchased Mogilevich’s Channel Island holding companies, Arigon and Arabat. Pratecs subsequently 
issued 10 million shares of the company at 20 cents each, and prepared the YBM transaction for 
completion. 

But on June 19, 1995, just a few months before the transaction to acquire YBM was to close, the 
Alberta Stock Exchange halted trading in Pratecs’s stock. The company cryptically explained the 
suspension as a response to “allegations made in London, England, against two individual 
shareholders of YBM,” whom they identified as a pair of British companies and their lawyers. “The 
companies are in no way related to YBM or its subsidiary, Arigon,” an obscurely written press 
release stated. 

In truth, both Canadian regulators and Bogatin himself were aware that British intelligence had 
spent three years investigating Mogilevich’s racketeering empire, traveling across the globe to gain 
knowledge of its structure, according to British intelligence documents and sources on the Alberta 
Stock Exchange. The Canadian authorities were told that YBM and Pratecs were not only controlled 
by Mogilevich, but that the probable intention of obtaining Pratecs a listing on the exchange was to 
have a vehicle to launder dirty money, manipulate stock shares, and bilk legitimate investors. 

By the summer of 1995, British intelligence was ready to strike against Mogilevich and his 
network of companies in Great Britain, which they suspected as fronts for drug trafficking, stolen 
goods, and money laundering. In an action code-named Operation Sword, British police raided 
Arigon’s offices in London, as well as the offices of its attorney, Adrian Churchward, who was 
arrested and interrogated. Documents found in Churchward’s office showed that over a three-year 
period the lawyer had used clients’ accounts to launder more than $50 million in criminal proceeds 
on behalf of Mogilevich. The funds, laundered through the Royal Bank of Scotland with the help of a 
solicitor, “originated from a variety of dubious sources in the former Soviet Union,” says a British 
intelligence report, which describes the money as “largely the proceeds of Russian organized crime 
in Eastern Europe from the Mogilevich and Solntsevskaya organization.” 

The High Court of Justice in London issued orders freezing the assets of Arigon and several of its 
shareholders, including Churchward and his wife, Galina, Mogilevich’s onetime paramour. She had 
an eleven-year-old son with Mogilevich who was being educated at a private school at Kent. 

But the criminal cases against Mogilevich, Churchward, and others had to be dropped after 
Russian prosecutors deliberately refused to turn over evidence, according to British intelligence. 
Mogilevich didn’t escape unscathed, however, for he was banned from entering the U.K. His British 
businesses were shut down, his solicitor’s reputation was ruined, Churchward was disbarred, and the 
Royal Bank of Scotland was subjected to a high-level internal inquiry by the Special Investigation 
Unit of the Bank of England. 

The British affair was not the only incident that nearly thwarted Bogatin’s attempt to gain a 
foothold in Alberta. In May 31,1 995, Czech police stormed a summit meeting of Eurasian mob 
chieftains at the U Holubu restaurant in Prague, which Mogilevich had bought in 1991 to use as a 
prime money laundering center, according to FBI and Israeli intelligence reports. The gangsters were 



meeting on the occasion of Sergei Mikhailov’s birthday to discuss carving up criminal jurisdictions 
and to iron out turf disputes between Mogilevich and Mikhailov’s Solntsevskaya organization. After 
years of cooperation, the men had come to despise each other. Mikhailov had tried to shake down 
Mogilevich for $3.5 million. There had been shouting matches, and then bombing attacks. 

On the eve of the conclave, an unidentified Russian delivered an anonymous letter to the chief of 
police in Budapest, stating that Mogilevich was to be assassinated at the celebration. “Mogilevich 
knew he was dealing with some very, very treacherous people,” said former FBI agent Robert 
Levinson. “They’d kill him in an instant.” 

After receiving the tip, the Czech prosecutor dispatched hundreds of cops to the restaurant, where 
they arrested, photographed, and fingerprinted two hundred partying mobsters. Their diaries, journals, 
and other documents were confiscated for photocopying. Anticipating a bloody shoot-out, the Czechs 
had parked two large refrigeration vans outside the restaurant to store the bodies. But the mobsters 
surrendered quietly, and following their release from custody they returned to their homes in 
Germany, Hungary, Russia, and Israel. 

Mogilevich himself was conspicuously absent from the celebration. “Mogilevich may have [sent 
in the] tip himself as a protective measure, or, having arrived late, noted the police presence and 
fled,” stated a classified FBI report. Whatever the case, five individuals were declared persona non 
grata by the Czech Republic following the police raid, including Mogilevich, Viktor Averin, and 
Sergei Mikhailov. 

Although Canadian intelligence had been aware of both the Czech and British incidents, stock 
market regulators had only to inspect the rogues gallery that made up YBM’s initial shareholders list 
to guess at its true nature. According to the author’s analysis of the disclosure documents, Mogilevich 
and his confederates owned up to 90 percent of the shares. Among the major stockholders were the 
Brainy Don himself, his fifty-two-year-old Ukrainian-born ex-wife, Tatiana, and their twenty-eight- 
year-old daughter Mila, a blue-eyed blonde, who lived on Wilshire Boulevard in Los Angeles, as 
well as Mogilevich’s ex-mistress Galina Grigorieva. 

Despite the events of the previous months, on July 25, 1995, Pratecs publicly announced that it had 
received a clean bill of health. Canadian regulators in Alberta later acknowledged that, without any 
actual court convictions, they lacked the hard proof necessary to keep the company off the exchange. 
And so “after a six- week halt in Pratecs’ shares,” wrote the Vancouver Sun , “the Alberta Stock 
Exchange allowed Pratecs to merge with YBM, a move that allowed the company to transform itself 
from a shell whose only asset was its stock exchange listing into a manufacturing firm with plants in 
Hungary, Kentucky and ultimately a listing on the Toronto Stock Exchange in 1996.” 

Touted by Bay Street underwriters, YBM quickly became the darling of the Toronto Stock 
Exchange, eventually being included in the prestigious TSE 300 Index, the Standard & Poor’s 500 
Index of Canada. The company’s glossy brochures boasted about big international deals and amazing 
new technologies. Almost overnight, it became nearly a billion-dollar-cap company. To enhance its 
image, YBM soon dropped many of the Russians from the board of directors, and added, among 
others, the powerhouse lawyer David Peterson, the former premier of Ontario. 

While YBM’s stock thrived, the Bay Street financial world continued to ignore the warning signs 
in the company’s operations. A November 1995 confidential report by Britain’s National Crime 
Squad concluded that Mogilevich had been transferring funds from Britain to Hungary, and from there 
to the United States and then on to Canada through YBM. Circulated throughout the top rungs of 


regulatory and financial circles by word of mouth, the report also asserted that Mogilevich was using 
the Canadian stock exchange listing “primarily to legitimise the criminal organisation by the floating 
on the stock exchange of a corporation which consists of the UK and USA companies whose existing 
assets and stocks have been artificially inflated by the introduction of the proceeds of crime,” 
including drug and arms trafficking and prostitution. 

A spokesman for one of YBM’s major underwriters, First Marathon, later admitted that it had 
heard rumors about the company’s ties to the Russian mob, but its concerns were allayed after 
auditors Deloitte & Touche initially reported the business to be financially sound. Unlike the bulls on 
Bay Street, the FBI was more skeptical. YBM — whose home office remained in Newtown — listed a 
paltry projected gross sales of $8,573 on its 1993 U.S. tax returns. In 1995, at the time of the 
acquisition of YBM by Pratecs, it claimed net sales of $32.5 million, net income of $3.3 million, and 
stockholder equity of $ 17.5 million. Surveillance of a YBM facility in Pennsylvania by the FBI 
revealed that it occupied a small section of a former school building. The space, the bureau 
concluded, was not capable of supporting either the 165 employees or the $20 million in sales YBM 
claimed in its glossy published report. 

Although by August 1 996 YBM’s board was aware that the firm was being investigated by the 
U.S. Attorney’s Office in Philadelphia, as minutes of a confidential YBM board meeting confirm, the 
company never informed its investors of the fact. During that same period, Bogatin was even 
promoting the company to the New York Stock Exchange, and the company was waiting approval for 
a listing on Nasdaq. 

Investors also had no way of knowing that YBM’s prestigious auditor, Deloitte & Touche, had 
issued a highly critical report, declaring that it had found irregularities and possible criminal fraud in 
the company’s 1997 annual report. It noted that “one or more illegal acts may have occurred which 
may have a material impact on [YBM’s] 1997 financial statements.” Among other problems, auditors 
discovered that $15.7 million in magnet sales to the Middle East and North America had been 
fabricated. Deloitte & Touche resigned when YBM failed to follow its recommendation to hire an 
outside forensic auditor to conduct a sweeping reevaluation of the company’s books and business 
methods. Several of YBM’s directors, meanwhile, sold millions of dollars of their shares in YBM 
stock after they received the report from Deloitte & Touche, but well before it was made publicly 
available. 

The beginning of the end finally came on May 13, 1998, when at 10: 15 A.M., U.S. Attorney 
Robert Courtney, head of the Organized Crime Task Force in Philadelphia, led some five dozen 
agents in a joint FBI, IRS, INS, Customs, and State Department raid on YBM’s offices in Newtown. 
Fax machines, computer hard drives, Rolodexes, bank statements, and shipping invoices were seized 
and loaded onto trucks. Citing the company’s alleged ties to Russian organized crime, the law 
enforcement agencies asserted that YBM was a vast money laundering machine for Mogilevich. Just 
twenty-three minutes after the raid, trading in YBM’s stock on the TSE 300 Index was suspended by 
Canadian authorities, but not before a quarter of its value had been wiped out. 

In the months that followed the raid, a succession of bizarre revelations besmirched what was left 
of the company’s tattered reputation. The Financial Times of London reported that a “revolutionary” 
scientific process YBM claimed it had invented for desulfurizing oil, and which accounted for 20 
percent of its revenues in 1997, didn’t even exist, according to the top earth scientists interviewed by 
the prestigious newspaper. 



On September 22, 1998, irate institutional investors finally staged a coup after court documents 
filed in Alberta revealed that more than $20 million in cash was missing from YBM’s accounts. Five 
directors, including Fisherman, were fired. On November 23, Bogatin received a “target letter” from 
the Justice Department stating it had gathered sufficient evidence to indict him for money laundering. 
He resigned two days later. 

The new board’s forensic investigators discovered what international police had strongly 
suspected all along — that Mogilevich had been directly involved in the affairs of YBM, siphoning 
money from the accounts of its subsidiaries, as well as using the company as a vast money laundering 
machine — with money passing through various front companies and banks in Moscow, the Cayman 
Islands, Lithuania, Hungary, and a Chemical Bank branch in Buffalo, New York. YBM received 
$270,000 ffomBenex, a shell company allegedly controlled by an associate of Mogilevich. 
Investigators later claimed that Mogilevich, using Benex, had laundered huge sums through the Bank 
of New York. When YBM’s newly installed board sent Pinkerton men to visit the company’s plant in 
Budapest, they were turned away by brutish guards brandishing Berettas and Uzis. The board couldn’t 
even get a key to one of the foreign plants. In all, not only were tens of millions of dollars of reported 
YBM sales bogus, but customers and even entire product lines turned out to have been fabricated. 

Finally, in late December 1998, the board announced that it expected YBM would be indicted and 
that it had no viable criminal defense. YBM was placed into receivership by an Alberta court. The 
government accused the company of fraudulently inflating the value of its securities by creating the 
appearance of record sales and revenues, while failing to disclose that it was run by a Hungarian- 
based mob boss. On June 7, 1999, YBM pleaded guilty to one count of mail fraud and one count of 
securities fraud. It was fined $3 million and agreed to make restitution to the thousands of defrauded 
shareholders. The company admitted that its principals played a shell game for regulators and 
investors, settingup paper companies to hide its actual control. The U.S. Attorney’s Office has 
allegedly filed three sealed indictments against company insiders, one of which has the Brainy Don’s 
name on it. Belatedly perhaps, in November 1999, ten of YBM’s former board members, including 
David Peterson, were charged by Canada’s leading securities commission with violating the Ontario 
Securities Act for allegedly failing to disclose to investors that the company was being investigated 
by U.S. authorities for its ties to Russian organized crime. They deny the charges. 

In the end, more than half a billion dollars in YBM’s market capitalization simply vanished. 
Perhaps billions more was made by mobsters manipulating the stock’s price, buying and selling 
blocks of shares on inside information. During its dramatic run on the Toronto Stock Exchange, YBM 
raised over $100 million in hard Western currency, and laundered hundreds of millions of dollars 
more. The casualties included many average investors, as well as groups like the Ontario Teacher’s 
Pension Fund, which was left holding $32 million of worthless shares. “It’s now clear that YBM’s 
only successful business [was] the laundering of criminal proceeds,” said shareholders in one of 
many class action suits filed against YBM’s former board of directors, Deloitte & Touche, and 
several law firms. 

“This is the most significant and serious case of stock fraud that I’ve investigated in eighteen 
years,” said Adrian du Plessis, a respected analyst for StockWatch in Vancouver, and a private 
forensic stock investigator. “It represents a level of corruption of the marketplace that is 
unprecedented in its nature.” 

The sensational size, sophistication, and sheer boldness of the YBM scam, however, should not 



obscure a fact that has continued to disturb many in law enforcement: namely, that it was hardly a 
unique event. “This is just one case,” says former FBI official James Moody, “but there are others just 
like it throughout the world.” 

How accurate that assessment was was strikingly demonstrated when, two years after the YBM 
scandal broke, Mogilevich found himself in the middle of the biggest money laundering case in U.S. 
history. It had been discovered that, through a series of front companies spanning Russia, Europe, and 
the United States, he and others, primarily Russian businessmen evading local taxes, had laundered 
billions through the esteemed Bank of New York. The massive scale of the operation, combined with 
the fact that it had occurred on U.S. soil, was a startling embarrassment to U.S. law enforcement and 
the government. (While the bank has not been charged with any wrongdoing, some investigators 
believe that the money laundering could not have taken place unless senior bank officials were bought 
off or otherwise involved. Indeed, in February 2000, Lucy Edwards, a former vice president of the 
bank’s Eastern European division, and her husband, Peter Berlin, pleaded guilty to money laundering 
charges. Indictments of other bank officials are expected.) 

Actually, Mogilevich had been making a mockery of law enforcement for a very long time. 
Although as early as the mid-1990s he had been publicly identified in congressional hearings as one 
of the top Russian mobsters in the world, prompting the U.S. State Department to bar him from 
obtaining a visa, the prohibition never stopped him from continually entering America under aliases 
on temporary traveler’s visas issued in Tel Aviv. Between December 1, 1995, and December 7, 1995, 
for instance, Mogilevich traveled to Toronto, Philadelphia, Miami, and back to Philadelphia. Well 
after the YBM affair had become headline news, the brazen don boasted to a Hungarian magazine that 
he traveled to Los Angeles in late 1998 to surprise his granddaughter on her birthday. In January 
2000, Mogilevich slipped into Boston to conduct business, say top European and U.S. law 
enforcement officials. 

Although he is also barred from entering seven European countries, Mogilevich travels 
extensively around the world in order to manage his business affairs. He has almost as many 
passports as he has aliases, which have included Semion Mogilevich, Senior Mogilevich, Semion 
Mogeilegtin, Semion Mobllerltsh, Seva Magelansky. Other members of his organization travel just as 
freely, often using forged passports of superior quality. Some of them are couriers who transfer large 
sums of cash from country to country, according to Israeli intelligence files. 

Mogilevich still controls a variety of criminal activities from one American coast to the other. 

And while he has been careful not to defile his own hands with the blood of his gangland victims, he 
has not refrained from associating with known killers while in America, prime among them Elson and 
Ivankov, whom he regularly visited on one of his numerous fraudulent passports. 

The Bank of New York scandal was not without its repercussions for Mogilevich, however. 
Perhaps most seriously, the man who had relied on his underlings to take responsibility for his crimes 
had lost his anonymity, one of his most valuable assets. In addition, the FBI — which ironically had 
built an international training academy just a short cab ride from Mogilevich’ s Budapest headquarters 
in 1994 — put intense pressure on the Hungarians to crack down on his operations there, and his 
homes and offices were raided by the Hungarian tax police. His presence in Budapest was costing too 
much blood, in any case; there had been more than 170 mob-related bombings in Budapest between 
1994 and 1999, many of them directed at or initiated by Mogilevich. 

Although Mogilevich has apparently abandoned Budapest as his base of operations, his global 



empire is still largely intact, and the Brainy Don spends much of his time flying between Moscow and 
Tel Aviv on his private jet. Mogilevich claims to feel secure in the Jewish homeland notwithstanding 
his feelings about his clamorous countrymen. When asked in September 1 999 by a Hungarian reporter 
to respond to charges that he was a major Russian crime czar, he laughed, dismissing the accusation 
as the mad “ravings of the FBI.” That same month, he successfully won a libel case brought against a 
Hungarian television station that broadcast a report about his criminal activities. When asked why he 
didn’t likewise sue the American media for similar stories, he replied that he wasn’t really a rich 
man, and that, in any case, he joked darkly, he had just paid a hit man $100,000 to kill American 
reporter Robert I. Friedman. 

Later that month, he complained to ABC News, “I have no business now. Who would do business 
with me?” he asked dejectedly as his underlings provided security, their faces hidden from the 
cameras. “I’ve lost my spark. Maybe I should tear my shirt off and prove my innocence, but I don’t 
even care anymore. ... There is a saying in Russia, ‘if you tell a rabbit over and over that he is a pig, 
he’ll oink.’ Everybody says I’m a criminal. I’m used to it. And the public is, too.” 

When questioned how the charges that he was a criminal had surfaced, he attributed them to a plot 
by the journalist Friedman and the American Justice Department. A few days after the TV interview, 
say reliable sources, he was trying to obtain a permanent residence permit in Spain so that he could 
operate his “humble grain business” from that country’s beautiful Costa del Sol and Barcelona. 



11 


GI, OB AT, CONQUEST 


W hen the international press, bankers, and law enforcement officials professed outrage at the 
announcement that Red Mafiya boss Semion Mogilevich was allegedly behind the laundering of as 
much as $7 billion through accounts at the Bank of New York, it recalled the scene in Casablanca 
when the corrupt but worldly wise Vichy prefect masterfully played by Claude Rains told Humphrey 
Bogart’s Rick that he was “Shocked, just shocked!” that gambling was going on in Rick’s cabaret. 

In fact, intelligence officials and government leaders had known since the early 1 990s the true 
state of affairs in the former Soviet Union. The CIA alone claims to have published more than a 
hundred reports since 1998 for the American foreign policy establishment documenting crime and 
corruption in Russia — a society where everything from submarines for the likes of Tarzan to 
fissionable material for Mogilevich was for sale. The agency reported that the Russian mob and its 
cronies in government and big business have looted the country into a condition resembling medieval 
beggary: the economy has declined every year since 1991. More than 40 percent of the country’s 
peasants are living in abject poverty, suffering through Russia’s third Great Depression this century. 
In the unforgiving fields, peasants are killing each other over potatoes. Social indices have 
plummeted. Workers’ minuscule paychecks come late or not at all. Horrific terrorist bombings, 
apparently the responsibility of rebellious Islamic republics, about which the authorities can seem to 
do nothing, are causing a further erosion of the public’s trust of the government. 

At the same time on Moscow streets are more Mercedes per capita than any place on earth, and 
the number one concern of the city’s nouveau riche is how to avoid paying taxes and hide their 
fortunes offshore. They revel away nights in gaudy sex clubs and expensive restaurants, gorging 
themselves on South American jumbo shrimp washed down with vodka and cocaine. Disputes are 
settled with bursts of submachine gunfire. It is a classic fin de siecle society erected on a seemingly 
limitless supply of dirty money. 

No post-Soviet institution has been immune from corruption, and even investigators have been 
investigated, often for good reason. Vladislav Selivanov, head of the Interior Ministry’s Organized 
Crime Division, admitted in a July 1998 press conference that a probe of the Federal Security 
Service, the successor to the old Soviet KGB, resulted in several criminal prosecutions and the 
dismantling of the service’s organized crime unit on the grounds that it had ties to the Russian mob. A 
few months later, during a bizarre news conference in Moscow, a group of mid-ranking FSB agents 
wearing sunglasses and ski masks declared that their once-vaunted agency harbored thugs, 
extortionists, and Mafiya hit men. 

To make matters worse, the country’s few political reformers have been sacked or killed. The 


Duma is a den of thieves, as was Yeltsin’s inner circle. The same has even been alleged of Yeltsin 
and his family, who have purportedly taken a million dollars’ worth of kickbacks from a Swiss 
contractor that renovated the Kremlin. But corruption and influence-peddling are a national plague in 
Russia as old as the czars. No one in Russia can purchase anything of value without a cash-laden 
handshake. 

Astonishingly, both the Bush and the Clinton administrations have unwittingly helped foster the 
Russian mob and the untrammeled corruption of post-Soviet Union Russia. When the CIA was asked 
in 1992 by Kroll and Associates, working on behalf of the Russian government, to help locate $20 
billion that was hidden offshore by the KGB and the mob, the Bush national security policy team 
declined to cooperate. The Bush group rationalized, according to Fritz Ermath, a top CIA Soviet 
policy analyst writing in The National Interest , “that capital flight is capital flight. It doesn’t matter 
who has the money or how it was acquired even if by theft; so long as it is private, it will return to do 
good things if there was a market.” 

Of course, that never happened, yet it did not prevent the Clinton administration from handing 
billions in aid to Russia without any accountability. With the vigorous support of the United States 
another $20 billion of International Monetary Fund loans has been deposited directly into Russia’s 
Central Bank since 1992. However well intentioned, the Clinton adminstration simply has no way to 
deliver “economic aid that will give benefits directly to the people,” as Brent Scowcroft, Bush’s 
national security adviser, has asserted. The chastened Russian Central Bank, admitting that it lacked 
any mechanism to monitor aid money once it was deposited, initiated an investigation to determine if 
the funds were stolen, and if so, whether they were part of the monies passed by Mogilevich and 
others through the Bank of New York. 

Until the Bank of New York fiasco, the top rungs of the U.S. foreign policy establishment refused 
to acknowledge the Russian government’s staggering corruption. In 1995, the CLA sent Vice President 
A1 Gore, who had developed a “special” relationship with then Russian prime minister Viktor 
Chernomyrdin, a thick dossier containing conclusive evidence of his widespread corruption. Gore’s 
friend had become a multibillionaire after he took over Gazprom, the giant natural gas monopoly, with 
holdings in banking, media, and other properties. The CIA said it cost $1 million merely to gain entry 
into Chernomyrdin’s office to discuss a business deal. It was also alleged, though Chernomyrdin 
denied it, that he was among the oligarchs who had been stealing the country’s resources after the fall 
of communism. 

Gore angrily returned the report, scribbling a barnyard epithet across the file, according to the 
New York Times, and declared that he did not want to see further damning reports about Russian 
officials. It is unlikely, then, that he read the classified FBI file claiming that two colonels in the 
Russian Presidential Security Service had traveled to Hungary in 1 995 to pay Mogilevich for 
information on the upcoming Russian political campaign, which was then allegedly passed on to 
Chernomyrdin. “The corruptive influence of the Mogilevich organization apparently extends to the 
Russian security system,” asserts the FBI report. 

“The bottom line is that Clinton and Gore had lots of warning about Russian corruption under 
Yeltsin’s banner of reform,” wrote political columnist David Ignatious in the Washington Post. “And 
the question continues to be: Why didn’t the administration do more to stop it?” 

The most charitable explanation, which now seems tragically ironic, is that they truly believed 
they were helping the ex- Soviet Union make a meaningful transition to democracy and a free market 



economy. 

“The American political establishment didn’t want to hear about Russia’s corruption,” says Jack 
Blum. “They believe they’re looking at nascent capitalism, and they are flat-ass crazy. A bunch of 
thugs run the country. They have stolen everything that isn’t bolted down, moved it offshore, and then 
globalized their criminal business.” 

It was only a matter of time before the Russian mob tried to buy its way into the American 
political system that has contributed to it so generously, if inadvertently. In New York, for instance, 
they almost succeeded. The invitations had been mailed, the menu prepared, and everything had been 
arranged down to the last detail for a $300 per couple, black-tie fund-raiser for then Governor Mario 
Cuomo on October 10, 1994, at Rasputin — the garish nightclub then owned by Monya Elson and the 
Zilber brothers. But on the eve of the event, the Cuomo campaign canceled. Officially, the explanation 
was a scheduling conflict; discreetly and quite unofficially, federal investigators had warned the 
Cuomo campaign that Rasputin was a bastion of the Russian Mafiya. 

A few months before the Cuomo fund-raiser occurred, there was a similar misjudgment, and one 
that represented a serious lapse in national security. Grigori Loutchansky, a Latvian-born convicted 
felon and president of the Austrian-based NORDEX, a multinational trading company, had been 
implicated in everything from major money laundering to smuggling nuclear components. House 
Speaker Newt Gingrich once said that U.S. government officials believed Loutchansky had shipped 
Scud missile warheads to Iraq from North Korea. The ubiquitous Loutchansky was also a former 
business associate of both Chernomyrdin and Semion Mogilevich, according to the CLA and other 
Western intelligence officials. Yet somehow this enormously wealthy underworld rogue was invited 
to a private Democratic National Committee fund-raising dinner for Clinton in 1993. During coffee, 
Clinton turned to the mobster to ask a favor: would he pass a message along to the Ukrainian 
government requesting it to reduce its nuclear stockpile? Clinton then posed for a photograph with the 
grinning hood, which Loutchansky later liberally passed out among his cronies, greatly enhancing his 
stature among corrupt government officials and the criminal underworld. When the photo of the men 
shaking hands was eventually published in a Russian newspaper, the CIA analyzed it to see if it was a 
fake. When they discovered it was genuine, agency officials were aghast. “Loutchansky had one thing 
in mind: legitimization,” a congressional investigator probing Russian organized crime explained. 

“He wanted U.S. citizenship and he wanted to buy a U.S. bank.” 

In July 1995, the DNC invited the mobster to a $25,000-a-plate fund-raising dinner for Clinton at 
the Hay Adams Hotel in Washington. At the last minute, the security services provided information on 
Loutchansky and the State Department denied him a visa, which he had obtained in Israel. He was 
subsequently banned from entering the United States, Canada, Hong Kong, and England. 

The mobsters were not easily dissuaded, however. In September 1995, not long after the 
Loutchansky ban, his partner at NORDEX, Ukrainian mob boss Vadim Rabinovich, attended a 
Clinton-Gore fund-raiser at the Sheraton Bel Harbor Hotel in Miami. Rabinovich came as a guest of 
Bennett S. LeBow, the chairman of Brooke Group Ltd., parent of Liggett, a cigarette manufacturing 
company. (LeBow refused to comment.) 

Rabinovich, who by his own account once served an eight-year jail term in Ukraine for theft of 
state goods, should not have even been in the United States, let alone attending a gala for the 
president, for he was on a State Department Watch List that bans aliens from entering the United 



States to commit crimes. Nevertheless, he, too, cleverly managed an all-important photo op, 
squeezing in between a smiling Clinton and Gore. That picture, too, appeared in the Eastern European 
press, greatly adding to the mobster’s reputation. 

The Republicans have not been immune to the Russian mob’s advances, either. In March 1994, 
Vahtang Ubiriya, one of Mogilevich’s top criminal lieutenants, was photographed by the FBI at a tony 
Republican party fund-raiser in Dallas, says a confidential FBI report. Ubiriya, a high-ranking 
official in the Ukrainian railway administration, has a prior conviction for bribery in that country. A 
friend of Mogilevich for some twenty- five years, he has been involved with him in extortion, fraud, 
and illegal currency operations there. 

This was not Mogilevich’s only attempt to manipulate the U.S. political system. After the INS and 
the State Department denied visas to YBM employees arriving from Budapest and Ukraine, Jacob 
Bogatin contacted the FBI office in Philadelphia for an explanation. Rebuffed, Bogatin — who had 
donated $2,250 to the National Republican Committee and an additional $500 to the National 
Republican Congressional Committee, a soft money account, between April 1996 and April 1998 — 
called upon Pennsylvania Republican congressman Jim Greenwood for help obtaining the visas. “I 
remember when they came to visit me and they brought all those brochures, and I remember how 
impressed I was that such a high-tech enterprise was there in the Newtown industrial park,” 
Congressman Greenwood recalled. “And I remember thinking, ‘Gee, I wonder how they had escaped 
my attention. ’ Normally when there is a particularly interesting high-tech industry in your district you 
become aware of it and often take a tour.” 

Greenwood’s staffers petitioned the State Department onBogatin’s behalf, requesting a reason for 
the denial of the visas. After it was “nonresponsive, I then made personal calls to the State 
Department to get to the bottom of it, and I was essentially told that what I ought to do is talk to the 
FBI,” said Greenwood. “We arranged for FBI representatives to come to my office in Washington.” 
Greenwood recalled that the agents told him in confidence that Russian godfather Semion Mogilevich 
was running YBM and that it was under investigation for money laundering among other crimes. They 
also said that Bogatin “had to know” what was going on. “It took a hell of a lot of gall if Bogatin was 
aware of this and [yet he] sat with a U.S. congressman, demanding that our government [allow] their 
employees back into the country,” Greenwood angrily declared. 

By the dawn of the new mille nni um Russian mobsters were lavishing millions of dollars in 
contributions on Democratic and Republican politicians. In New York City, commodities mogul and 
alleged wiseguy Semyon (Sam) Kislin has been one of mayor Rudy Giuliani’s top campaign 
supporters. Kislin, various relatives, and his companies, raised or donated a total of $64,950 to 
Giuliani’s mayoral campaigns in 1993 and 1997. A Ukrainian immigrant well known among the 
Russian Jewish community in South Brooklyn, Kislin has also made generous donations to 
Democratic Senator Charles Schumer as well as other state politicians. 

According to a confidential December 1994 FBI report and underworld sources, Kislin is a 
member of the Ivankov organization. These sources say that Kislin’ s New York commodities firm has 
been involved in laundering millions of dollars, and co-sponsored a U.S. visa for a man named Anton 
Malevsky, who is a contract killer and head of one of Russia’s most bloodthirsty Mafiya families. 

Kislin’s donations to charities and politicians bore fruit in 1996 when he was appointed to be a 
member of New York City’s Economic Board of Development Corporation. On December 2, 1999, 
Giuliani reappointed Kislin to the board, stating in a letter that his “service is deeply appreciated.” 



Kislin has denied any ties to the Russian mob, insisting at a December 1999 press conference that “I 
have done nothing evil.” 

Although the Russian Mafiya s invasion of American politics is still in its infancy, it already poses 
a huge threat to U.S. national security interests abroad. The mob dominates Russia, and has Eastern 
Europe in a bear hug. It is also turning Western Europe into its financial satrapy, and the Caribbean 
and Latin America have quickly become sandy playpens for coke and weapons deals with Colombian 
drug lords. There are few nations where the Russian mob does not hold some influence, making 
efforts to combat it ever more difficult. 

A striking example is Switzerland, where the Mafiya has been drawn by the country’s world- 
renowned, highly secretive banking system. “There are three stages of Russian Mafiya penetration,” 
Jean Ziegler, a university professor in Switzerland has explained. “When the Soviet Union broke up, 
Switzerland was the laundering place for immense fortunes. Then Mafiya leaders started sending 
their children to expensive private schools here. Now we are in the third stage, where some of the 
Mafiya dons are transferring their operational headquarters to Switzerland — and that is very 
dangerous.” More than six hundred Russian dons have moved to Switzerland, and, according to Swiss 
court documents, more than $60 billion of Russian mob money has been laundered through its banks. 

In one of Switzerland’s first strikes against a major Russian gangster, Sergei Mikhailov was 
arrested in October 1996 in Geneva for money laundering and for his leadership of the Solntsevskaya 
crime family. Headquartered in Moscow, the Solntsevskaya mob openly operated out of a stylish 
commercial office building at Leninsky Prospekt, where it controlled much of the city’s gambling, 
casino, and banking business, as well as prostitution, drugs, the city’s used car trade, and the Vnukovo 
airport, the city’s principal cargo terminal. It also owned real estate from Malaysia to Monaco, 
setting up a labyrinth of fictitious international firms and offshore accounts to launder money received 
from the sale of narcotics, arms, and extortion. At the time he was apprehended, Mikhailov was living 
in a quaint chateau outside Geneva, where he drove around in a blue Rolls-Royce, maintained a 
$15,000-a-month clothing budget, and doted on his wife and two children. He traveled on a Costa 
Rican diplomatic passport and had been appointed that country’s honorary consul to Moscow. 

Inside Mikhailov’s lavish home, police found sophisticated Israeli military devices that allowed 
him to eavesdrop on secret Swiss police radio communications and to tap telephones. They also 
discovered a trove of documents listing front companies he allegedly used to launder money from 
drugs and arms sales. Investigators learned that Mikhailov had invested millions of his laundered 
dollars in America: he had bought a Brighton Beach disco called Nightflight, which he owned with 
Ivankov. He acquired another club in Los Angeles. He also purchased a car dealership in Houston 
with a local who agreed to send red Jeep Cherokees to him in Geneva so he could give them as gifts 
to friends. The Texan had no idea of the danger to which he was exposing himself when he began to 
pocket Mikhailov’s money, and though the furious gangster sent a hit man to Houston, the killer was 
captured by the police. 

Investigators learned that apart from the tranquil Geneva suburbs, Mikhailov’s favorite hangout 
was Miami. After his men committed murders in Europe and Russia, they would check into the 
Fontainebleau Hotel “where they would stay by the beach and wait for the heat to cool off,” 
according to retired FBI agent Robert Levinson. But before hitting the soft white sand, the mobsters 
liked to stop at a nearby Sports Authority, where they bought snazzy jogging outfits to preen for South 



Beach’s glamorous models. 

Although Mikhailov insisted, typically, that he was a simple businessman, he is a career criminal 
with an excellent strategic mind. Born on February 7, 1958, in Moscow, the onetime waiter was first 
convicted in the Soviet Union in 1984 of theft and perjury, according to a classified Russian 
document. He was later investigated for murdering a casino owner and a banker. In 1989 he was 
arrested for extortion, but the victim found it judicious to recant. 

The Swiss authorities were confident that they had an excellent case against the mobster, but on 
the eve of Mikhailov’s Swiss trial, a Dutch father and son who had engaged in some questionable 
business dealings with Mikhailov in Moscow were executed gangland- style. The father was stabbed 
in the eye and bled to death; his son was gunned down. Soon afterward, Moscow’s chief of police 
sought political asylum in Switzerland, claiming he was threatened by Mikhailov’s men. The press 
was targeted, too. Veteran Russian mob reporter Alain Lallemand of Le Soir in Brussels was 
threatened after he wrote a series about Mikhailov that apparently displeased the mobster. Lallemand 
was warned by several intelligence services that Mikhailov had scheduled his assassination, and the 
reporter and his family went underground for a month. The police captured an ex-Belgian gendarme in 
Brussels who was about to carry out the contract. 

Despite these intimidation tactics, the trial went forward, with a total of ninety witnesses being 
issued protective vests and placed under close guard. The key witness against Mikhailov was Robert 
Levinson, the ex-FBI agent based in Miami who specialized in the Russian Mafiya. Some foreign 
intelligence agents, however, were dismayed when they saw his briefing book, which seemed to 
primarily consist of warmed-over FBI gossip. Why hadn’t the bureau dispatched active agents with 
more current material that would hold up as evidence? asked Pierre Delilez. “They are always telling 
the European intelligence agencies to share. They share nothing.” Lallemand, however, insists that the 
FBI’s material was excellent, though the best of it never made it into evidence. 

Meanwhile, Mikhailov had succeeded in securing a high-profile paid expert witness for his 
defense: former U.S. Attorney General Ramsey Clark. Clark has become something of a heretic for 
having taken on a series of unpopular cases like representing a German SS guard who the U.S. 
government said massacred Jews during World War II and then illegally gained citizenship. 

Clark was first approached by a young Russian lawyer representing Mikhailov, who thought an 
American with his prestigious legal pedigree would be of great help to his client. Clark politely 
declined, but Mikhailov’s men persevered over the next several months. A group even came to his 
downtown Manhattan office and asked him to slam the FBI with a “slap suit” that would keep their 
evidence out of Swiss court. Clark informed them that they didn’t have a legal theory that would stand 
up in an American courtroom. 

Finally, Mikhailov’s lawyers convinced Clark to look at Levinson’s FBI briefing book and some 
documents that they had obtained in discovery. After reading the material, Clark changed his mind. 

The FBI reports reminded him of the kind of malicious, untested gossip the bureau had used when it 
wanted to bring down civil rights leaders. “It was American criminal imperialism,” he stated. 

Even though the burden of proof was on Mikhailov — under Swiss law, he had to prove that he 
was not the head of a mob family — Clark skillfully helped dismantle Levin-son’s testimony, not only 
showing its inconsistencies, but arguing effectively that the bulk of it was built on rumor, hearsay, and 
derived ft om unverifiable anonymous sources. Levinson could neither read nor write Russian, Clark 
declared, but more importantly, the ex-FBI man’s intelligence files — or information culled from them 



— would almost certainly never be allowed into evidence in a U.S. court of law. 

Yet Clark’s defense alone could not have vindicated the mobster. At least as damaging to the 
Swiss authorities’ case was the fact that several Russian prosecutors working with the Swiss were 
suddenly and inexplicably fired, after which the Russian government reneged on its previous 
promises to send crucial documents to Geneva. 

Mikhailov, who had been held in a Swiss prison for two years, was acquitted in December 1998. 
“My heart is full of gratitude,” he announced at an airport press conference. “I love you.” He was then 
quietly deported to Moscow aboard an Aeroflot jet. The acquittal was a devastating blow to both 
Swiss and international law enforcement who had been battling the Russian mob, and it was followed 
by the usual round of fingerpointing. “The next time we try a major Russian mob boss, we are going to 
need a watertight case,” said Pierre Delilez, who believes that the FBI intentionally fumbled the case, 
perhaps in order to be able to use Mikhailov as an intelligence agent. James Moody, meanwhile, 
blamed Levinson for a poor performance. In truth, it was Mikhailov’s power, money, and 
international connections that had succeeded in winning his release and enabling him to continue his 
glorious criminal career. 

The Swiss, meanwhile, are still struggling with the intractable problem of the Russian mob. 

Ziegler says the only way to derail their inexorable advance is to ban Russian banks from operating in 
Switzerland, since most of them are controlled by gangsters. Some Swiss banks have already adopted 
a blanket policy of not accepting any Russian clients. On September 3, 1999, Swiss authorities 
announced that they had frozen fifty-nine bank accounts, and asked Swiss banks to provide 
information on the two dozen Russians who held them. Yet in a country where it is not illegal to bribe 
a public official, the Swiss skirmish against the Russian mob smacks of the Marx Brothers going to 
war against a mythical kingdom in Duck Soup. 

Of all the nations where the Russian mob has established a presence, none has been more deeply 
compromised than the State of Israel, America’s staunchest ally in the volatile Middle East. More 
than 800,000 Russian Jews have made aliyah or settled in Israel since the first massive wave of 
immigration in the 1970s. The Russians took advantage of Israel’s most sacred law — the Right of 
Return, which guarantees Jews the right to return to their ancestral homeland, where they would 
receive citizenship and live as free men and women outside the odious yoke of anti-Semitism. “The 
Russians are a blessing,’ said Israel’s top political columnist Nachum Barnea, who stands in public 
awe of their brilliant intellectual gifts in a variety of fields. 

But just as in Brighton Beach, Russian immigration to Israel has brought a more unwelcome 
element — the vor v zakonye and their criminal minions. Ten percent of Israel’s five million Jews are 
now Russian, and 10 percent of the Russian population “is criminal,” according to NYPD notes of a 
briefing in Manhattan by Israeli police intelligence official Brigadier General Dan Ohad. 

“There is not a major Russian organized crime figure who we are tracking who does not also 
carry an Israeli passport,” says senior State Department official Jonathan Winer. He put the number at 
seventy- five, among whom are Mogilevich, Loutchansky, Rabinovich, and Kobzon. 

Many of the mobsters who have Israeli citizenship, such as Eduard Ivankov and Sergei Mikhailov, 
are not even Jewish. In the mid-1990s, an Israeli police sting — code-named Operation Romance — 
netted, among others, a high-ranking Interior Ministry official who was taking payoffs from Mikhailov 
and convicted KGB spy Shabtai Kalmanovitch to issue passports to dozens of Russian gangsters, 



according to Brigadier General Hezi Leder, the Israeli police attache in Washington, and classified 
FBI documents. (Kalmanovitch, after serving time in an Israeli prison for treason, became one of 
Moscow’s most notorious mobsters and frequently returns to Israel.) 

Russia’s criminal aristocracy covets Israeli citizenship “because they know Israel is a safe haven 
for them,” said Leder. “We do not extradite citizens.” 

“The Russians then use the safe haven to travel around the world and rape and pillage,” added 
Moody. 

The country has also remained attractive to gangsters because “Israel is good for money 
laundering,” explained Leder. Under Israeli law, banks can accept large cash deposits with no 
questions asked. In one instance, a corrupt ex- deputy prime minister of Ukraine smuggled $300 
million of illicit cash into Israel in several suitcases, and deposited it into a bank, as Israeli Minister 
of National Security Moshe Shahal told a gathering of intelligence heads in June 1996. “I’ve watched 
Russian mobsters exchange suitcases full of cash out in the open at the Dan Hotel’s swimming pool,” 
laughed an American underworld crime figure. “Israel is a country that encourages people to come 
and invest money,” said Leder. “There is no mechanism to check the origin of the money.” 

Israeli police officials estimate that Russian mobsters have poured more than $4 billion of dirty 
money into Israel’s economy, though some estimates range as high as $20 billion. They have 
purchased factories, insurance companies, and a bank. They tried to buy the now defunct, pro-Labor 
Party Davar daily newspaper, and the pro-Likud Maariv, the nation’s second largest newspaper. 

They have even put together a koopa, or a pool of money, for bribes and other forms of mutual 
support. One of Leder ’s greatest fears is that the Russians will compromise Israel’s security by 
buying companies that work for the military- industrial complex. The mobsters, in fact, attempted to 
purchase a gas and oil company that maintains strategic reserves for Israel’s military. “They could go 
to the stock market and buy a company that’s running communications in the military sector,” he 
complains. 

Insinuating themselves throughout the country, Russian dons have bought large parcels of 
impoverished development towns, taking over everything from local charities to the town hall. For 
instance, Gregory Lerner, a major Russian crime boss who arrived in Israel with huge amounts of 
money, allegedly owns everything from fashionable restaurants to parts of several port city 
waterfronts. 

“Do you know what Gregory Lerner did in Ashkelon?” Leder asked me during an interview in 
New York. “His mother was three times in the hospital there. He bought new medical equipment and 
dedicated it to his mother! It’s the way the mobsters wash their name.” They do so, he explains, in 
order to build up grassroots support and openly influence politicians — or even run for elective office. 
Leder worries that one day three or four Russian gangsters who have bought their legitimacy will win 
Knesset seats, take over a key committee, and be in an ideal position to stop an important piece of 
anti-crime legislation, such as a proposed bill to criminalize money laundering. 

One of Leder ’s worst fears came true when Russian gangsters handpicked several candidates to 
run for local and national offices, according to the minutes of a classified Israeli cabinet meeting held 
by the Committee of the Controller in June 1 996. And in May 1 997, Israeli police launched a probe 
into allegations that Lerner attempted to bribe former Prime Minister Shimon Peres, among other 
Knesset members and cabinet ministers. The investigation was inconclusive, however, and no charges 
were filed. - 


One politician already ensnared in the web of organized crime is Russian-born Natan Sharansky, 
the head of the Russian Yisrael Ba- Aliya and minister of the interior in the government of Prime 
Minister Ehud Barak. Because of his resistance to the Soviet regime and his strong and open 
identification with Judaism, he suffered a long, brutal confinement in the Gulag before international 
pressure led to his release. In Israel, the charismatic dissident was lionized by the Jewish people, and 
he became a power broker for the large and growing Russian emigre community, whom he helped 
integrate into a rigid society that sometimes seemed jealous of the talented new Russians. 

However, Sharansky has publicly admitted that his party has accepted campaign contributions 
from NORDEX president Grigori Loutchansky. Officials from the U.S. Congress, the State 
Department, and the CIA pleaded with Sharansky to sever his ties to Loutchansky. “We told Sharansky 
to stop taking money from Loutchansky,” says Winer. “We told him about [Loutchansky’ s] MO: 
bribery, influence peddling, that he was a bridge between foreign governments and traditional 
organized crime.” 

Sharansky simply refused, arguing that he needed the money to resettle the tidal wave of Russian 
emigres. “When we warned Sharansky,” says the congressional investigator, “to stop taking money 
from Loutchansky, he said, ‘But where am I going to put them,” referring to the huge influx of Russian 
Jewish refugees. “’How am I going to feed them? Lind themjobs?”’ He figures Loutchansky is just 
another source of income. 

“Sharansky is very shrewd,” the congressional investigator continued. “He knows better. It was a 
cynical [decision]. He did take money. Then he asked, ‘Why shouldn’t I?’ The CIA warned him that 
Loutchansky was trying to buy influence through him and his party for [the] Russian Organized 
Crime/Russian government combine. We told Sharansky that Loutchansky is a major crook.” 
(Sharansky declined to comment.) 

Ignoring all the warnings, Sharansky introduced Loutchansky to Benjamin Netanyahu prior to 
Israel’s 1996 national elections. The Israeli press reported that Netanyahu received $1.5 million in 
campaign contributions from Loutchansky, a charge the prime minister hotly denied. “The Likud is 
corrupt, and Bibi [Netanyahu] is disgusting,” says Winer. “He’s had meetings with Loutchansky and 
Kobzon — criminals promoting their own interests.” 

Kobzon’s influence in Israel may exceed that of even Loutchansky and Mogilevich. “Kobzon has 
big [political] connections in Israel,” says Leder. Lor instance, in January 1996, Kobzon was 
detained upon his arrival at Israel’s Ben Gurion International Airport “because of his ties to the 
Russian Mafiya, ” Labor Party Knesset member Moshe Shahal said in his cramped Knesset office in 
Jerusalem. Shahal, at the time the country’s security minister, intended to send the mobster back to 
Russia, but then the phones started ringing in the chambers of high government ministries. Kobzon’s 
friends in Israel petitioned the minister of the interior, the minister of transportation, and Loreign 
Minister Shimon Peres, who finally ordered the airport police to free Kobzon and let him enter the 
country. Peres, who was being pressed by the Russian ambassador, told Shahal that he relented to 
avoid a messy incident with the Russian government. (The following year, Kobzon flew to Israel in 
his private jet to pickup Marat Balagula’s eldest daughter, who lives inNetanya, to bring her back to 
Moscow to celebrate his sixtieth birthday.) 

With two decades of unimpeded growth, the Russian Mafiya has succeeded in turning Israel into 
its very own “mini-state,” in which it operates with virtual impunity. Although many in international 
law enforcement believe that Israel is by now so compromised that its future as a nation is imperiled, 



its government, inexplicably, has done almost nothing to combat the problem. In June 1 996 Leder, then 
chief of Israeli police intelligence, prepared a three-page classified intelligence assessment that 
concluded: “Russian organized groups [had] become a strategic threat” to Israel’s existence. He 
documented how they were infiltrating the nation’s business, financial, and political communities. 
Shahal used the report to brief Prime Minister Yitzhak Rabin, Shin Bet, Israel’s FBI, and Mossad, and 
provided his own recommendations on how to uproot the Russian mob. Before Rabin had a chance to 
act on the plan, he was assassinated by a right-wing Jewish religious zealot in Tel Aviv following a 
peace rally. Shimon Peres subsequently set up an intra-agency intelligence committee on the Russian 
mob after reading Leder ’s report, but did little else. Leder ’s report was shelved by Netanyahu, 
according to Shahal. 

“Israel is going to have to do something,” says James Moody. “They could lose their whole 
country. The mob is a bigger threat than the Arabs.” 

Leder agrees: “We know how to deal with terrorist organizations. We know how to deal with 
external threats. This is a social threat. We as a society don’t know how to handle it. It’s an enemy 
among us.” 

Why should Americans be concerned about the global explosion of Russian organized crime and 
the concomitant corruption in Russia? The simple answer is that the nuclear-capable behemoth is on 
the verge of a political and economic meltdown. “The Russian [people] are deeply humiliated,” Brent 
Scowcroft, Bush’s national security adviser, has said. “They have lost their superpower status and 
they are turning against the U.S. and against the West.” In historical terms, the closest analogy to the 
financial situation in Russia is the Versailles Treaty at the end of World War I, when the Western 
allies demanded reparations from the Germans. Huge amounts of capital were forced out of Germany, 
so impoverishing the nation that it helped set the stage for Hitler. “That is the only parallel we have of 
a vast change in a society, accompanied by massive decapitalization — and look at the consequences,” 
said Jack Blum, who is consulting with the House Banking Committee in its investigation of Russian 
money laundering. “Russia is three times our size and has nuclear weapons. Why should we care? 
Excuse me. Common sense says you have to care mightily.” 

It should also by now be abundantly clear that the Russian Mafiya is made up of multipurpose, 
entrepreneurial master criminals. “Once funded, once flush, with the billions of dollars they ripped 
off, these boys are in business doing every shape, manner, and form of crime globally,” Blum 
continued. “So it was Russians who were doing the gasoline daisy chains in New York, New Jersey, 
and Long Island, in which billions of dollars in excise tax was ripped off; it’s Russians who are 
screwing around with Colombians, figuring out how to deliver weapons to them. Should Americans 
not care about that? That’s going on right here. 

“If nothing else, Americans should worry that they’ll drive up the price of real estate in the 
Hamptons,” Blum said with a sarcastic laugh. 

“The Hamptons are filling up with Russians,” Mike Morrison, a criminal investigator with the IRS 
told me. “When we ask them where they got the money to purchase their house or business, they 
produce a document from Uncle Vanya in St. Petersburg who says it’s a gift. There is nothing we can 
do.” 

Meanwhile, Russian mobsters move easily in and out of the United States on visas “that they get in 
Israel to dance through our clearance process,” says Blum. Or they obtain visas as employees of shell 



corporations like YBM, or as friends of NHL hockey players, or as “film consultants,” as Ivankov 
did. “So should we worry about that?” asks Blum. “Of course!” 

America’s vast wealth will always be an irresistible target for the Russian Mafiya, and their most 
sophisticated scams are likely to cause the most damage: their devious financial machinations on Wall 
Street, their money laundering, their infiltration of prestigious institutions like the NHL. Should we 
worry about that? In a few years, predicts James Moody, the Russian mob will be bigger than La 
Cosa Nostra in America. And perhaps GE, and Microsoft, too. 



POSTSCRIPTS 


COD BLESS AMERICA 


It’s a warm summer day. Bobby Sommer looks like a shell-shocked grunt in a World War II movie. A 
detective in the 61st Precinct in Brighton Beach, he is clearly on the verge of surrendering to a force 
that has him outgunned, outfmanced, and outwitted. A Russian crime group bought the building 
directly across the street from his station house, and the gangsters have been photographing detectives 
as they saunter in with their snitches. It took the police about a year to wise up. Sommer is sometimes 
followed by Russian thugs at the end of a shift. “I’m tailing them, and they are tailing me,” says the 
fifty-something cop, who wears cheap leather boots and a worn expression. 

Sommer’s gray metal desk is cluttered with case files. More than half are Russian mob-related. 
Arrayed across the criminal debris are glossy photos of dismembered Russian crime victims. “If you 
cut off the head, and the arms and feet are missing, too, you can’t get a positive identification on the 
torso. It’s brilliant,” he says dejectedly. 

“You can’t work a homicide in Brighton Beach,” Sommer continues, gloom settling in his face like 
the pall of smoke after a heavy battle. “The Russians don’t talk. Someone could get whacked in a club 
in front of a hundred diners, and nobody would see anything. So they will kill with impunity.” 

Russian organized crime incubated in Brighton Beach for twenty years before the city and federal 
government tried to stop it, he says angrily. By then, it had merged with even more powerful 
organized crime syndicates that prospered in Russia after perestroika. Sommer says he barely has a 
budget to pay for snitches. How is he supposed to stop a Byzantine global crime menace? 

“Why are we being victimized by noncitizens who can run to Israel or Russia and can’t be 
extradited? The Russian gangsters have told me that they’ve come here to suck our country dry. My 
uncle died on the beaches of Normandy defending this country. How did the Russian mob become so 
entrenched? They are into Social Security, Medicare, and Medicaid fraud. Why is it that every 
ambulance service in Brooklyn is run by the Russian mob? Why are so many of their doctors 
practicing without a license? They have invaded Wall Street from boiler-room operations to 
brokerage houses. Nothing is too small for them to steal. Even the guys with the multimillion-dollar 
Medicare scam still have to have their food stamps. The first generation are all thieves. Maybe the 
second generation will become a little more American.” 

A few blocks away, in one of the tidy Art Deco apartment buildings that line the seaward side of 
Brighton Beach Avenue in Brooklyn, a big Russian is sprawled on his back on a leather workout 


bench. A masseur kneads his lumpy body. The living room, where he spends hours every day, is 
decorated like the interior of a coffin, with wallpaper painted to resemble gathered gray satin. He 
watches a thirty-two-inch color TV in a mirror. 

“The police steal the drugs and kill everybody,” he says, while a Russian-language movie blares 
in the background. “I’ve seen it before.” 

The Russian has an enormous chest and huge belly, but his legs are spindles. The masseur helps 
him sit up. Two large craters are sunk deep into his fleshy white back. They were made by dumdum 
bullets that shattered his spine. 

The Russian was once an imposing figure, standing over six foot four — a man who favored floor- 
length black leather jackets with ermine collars. He was wearing his favorite jacket, a .45 concealed 
inside, when an assassin on a motorcycle shot him on a Brooklyn street corner in full view of a 
busload of schoolchildren several years ago. A onetime heroin and arms trafficker, he says that an ex- 
business partner commissioned the hit to settle a score. Before the ambush, he had been one of the top 
gangsters in Brighton Beach. Even after the shooting, he was working, running an extortion ring at 
Kennedy Airport from his wheelchair. He “taxes” Russians $1,000 to retrieve their shipped goods 
from Aeroflot. 

Lifted onto his bed by his son and the masseur, the Russian sighs, appearing more like a young 
Buddy Hackett than a notorious criminal. “Look what they did to me,” he says softly. “Look how 
everybody has to step over me. They ruined my life.” 

Yet talking about the Russian Mafiya reinvigorates him. “The Russians are stronger than the 
Italians,” he says assuredly. He doesn’t mean tougher — yet. He means wealthier. “Saudi Arabia is 
small potatoes,” he boasts. “The U.S. goes into Moscow with $100 million of aid, and the mob walks 
out with $105 million. They have so much money it would take years to count it with a computer.” 

The big Russian brags about the way the mob’s tentacles have spread around the world in a few 
short years. “Lor Russians, enough is never enough. If a Russian makes $20 million, he wants $40 
million. They never know when to stop. There is a saying in Russia: ‘The house is burning and the 
clock is ticking.’ It means you have to keep making money every minute. 

“Even Russian racketeers and crooks want their children to be doctors and lawyers. But some of 
the kids have learned that they can make more money by being crooks,” he says somberly. “Young 
Russian kids with MBAs are getting jobs on Wall Street. They are setting up all kinds of scams. 
They’ll hurt a lot of people. There’ll be a lot of suicides. 

“In this country, it’s so easy to make money,” the Russian says. “I love this country. I would die for 
it.” 



From an award-winning investigative journalist comes an astonishing expose of Russian 
organized crime, its growing power in the United States, and its terrifying implications for the 
rest of the world. 

In the past decade, from Brighton Beach to Moscow, Toronto to Hong Kong, the Russian mob has 
become the world’s fastest-growing criminal superpower. Trafficking in prostitutes, heroin, and 
missiles, the Mafiya poses an enormous threat to global stability and safety. 

The black-market corruption of the Brezhnev era proved the perfect breeding ground for organized 
crime. Beginning in the 1970s, Soviet emigres — including a large number of felons and murderers the 
USSR was happy to get rid of — began arriving in the United States and a number of them quickly 
established themselves as a major criminal force in New York, Las Vegas, and elsewhere. 

But it was the breakup of the Soviet Union that made the Russian mob what it is today. In a weakened, 
impoverished Russia, it quickly became the dominant power. And it has now spread to every corner 
of the United States, infiltrating its banks and brokerage firms — and American law enforcement is 
just waking up to this enormous problem. 

No journalist in the world knows more about the Russian mob in America than Robert Friedman. At 
great risk to himself, he has made connections with a number of top criminals who have gone on 
record about their activities for the first time. The result of his discoveries is a revelation: the Red 
Mafiya is everywhere. The implications — for law enforcement, the economy, foreign policy, for the 
American people themselves — are staggering. 



Robert I. Friedman has been covering the Russian mob for Details, Vanity Fair, and New York for 
years. He is the author of Zealots of Zion: Inside Israel s West Bank Settlement Movement. He lives 
in the New York area. 


IN NORTH AMERICA ALONE, THERE ARE NOW THIRTY RUSSIAN CRIME SYNDICATES 
OPERATING IN AT LEAST SEVENTEEN U.S. CITIES, MOST NOTABLY NEW YORK, MIAMI, 
SAN FRANCISCO, LOS ANGELES, AND DENVER. THE RUSSIANS HAVE ALREADY PULLED 
OFF THE LARGEST JEWELRY HEIST AND INSURANCE AND MEDICARE FRAUDS IN 
AMERICAN HISTORY, WITH A NET HAUL EXCEEDING $1 BILLION. THEY HAVE INVADED 
NORTH AMERICA’S FINANCIAL MARKETS AND COOLEY INFILTRATED THE WORLDS OF 
BUSINESS, REAL ESTATE, AND EVEN PROFESSIONAL SPORTS. “THE RUSSIANS DIDN’T 
COME HERE TO ENJOY THE AMERICAN DREAM,” NEW YORK STATE TAX AGENT 
ROGER BERGER SAYS GLUMLY. “THEY CAME HERE TO STEAL IT.” —from the 

INTRODUCTION 



On June 30, 1989, Murray Wilson was convicted by a federal jury in Las Vegas of conspiring to defraud the Dunes of more than a 
m illio n dollars. The feds offered Wilson his freedom if he would flip on Shenker, who they believed ordered the scam. He declined, 
preferring to take his chances with the judge at sentencing. It was a bad bet: he was sentenced to three years. The assistant U.S. 
attorney lacerated Wilson, calling him “a conniving, calculating thief’ and “a habitually violent man” who is “known to have a major 
influence over the Russian Jewish Mafia, the group that is tied to the Genovese LCN [La Cosa Nostra] family. The group specializes in 
robberies, thefts, and burglaries. Evsei Agron, a close associate of Wilson, is one of the individuals that Wilson admitted recommending to 
the Dunes. Agron [runs] the Russian Jewish Mafia.” 


- NBC-TV national news later reported that it was Franzese who had ordered Iorizzo and the heads of the Russian consortium to send 
checks for $5,000 drawn on their shell company accounts to Cuomo’s campaign. In all, $25,000 was diverted to Cuomo in this way. 
Confronted with this revelation, Cuomo replied that it was impossible to do due diligence on each and every political donation. 


1 Casso, speaking behind a black veil, testified to a Senate panel probing the Russian mob in 1996. 


1 In 1990, Laskin accepted a large advance on a heroin deal from two Italian organized crime drug traffickers, Renato Pantanella and 
Francesco Guarnacchia, says a secret FBI report. He reneged on the deal. In May 1991, Laskin was attacked in the parking garage 
outside his Munich apartment. One attacker shoved a gun to his head, and squeezed the trigger. It jammed. The assailant then took out a 
knife and stabbed him. As Laskin struggled, another assassin stepped out of the shadows and stabbed him eleven more times. “He gutted 
him like a pig,” said a source. 


1 In 1999, U.S. government sources leaked to Newsday and The New Yorker that in exchange for Soviet Jewish immigrants, Pollard 
gave the Soviets, among other things, a computer file that allowed them to identify American foreign agents in the field. 


Shortly after Brokhin’s death, Breindel faced his own investigation. On May 23, 1983, the Senate aide was arrested at a Holiday Inn in 
northeast Washington after purchasing five bags of heroin from an undercover cop for $150. Breindel, who had top security clearance, 
was i g no min ious ly fired by Moynihan. The senator said in a statement to the press that he had no reason to believe that there had been 
any “intelligence losses attributed to Breindel,” somberly adding that “this is a matter for further and thorough investigation.” Breindel’s 
career miraculously recovered and thrived. The onetime Harvard Crimson editor went on to become the editorial page editor of the 
New York Post and vice president of Rupert Murdoch’s News Corporation before he died in 1998. 


1 In an August 1994 interview with the New York Times, Peter Grinenko, by then an investigator in Brooklyn DA Joe Hynes’s office, 
downplayed the threat posed by Russian organized crime: “As organized crime in America, they are a flea on a horse.” In an interview 
with the author, Grinenko said, “My assessment is that there are too many fucking reporters out there that are making [Russian] 
godfathers. How does that sound? Would you quote me on that?” 

Grinenko openly admits that he has had extensive business ventures in the former Soviet Union, including a project to manufacture 
an American cigarette there. Law enforcement officials experienced in Russian crime remark that it can be difficult to conduct such 
business without working out an accommodation with organized crime. According to The Economist, cigarettes are a gangster-ridden 
industry in Russia. “Two Philip Morris executives had to leave Moscow in a hurry in 1997 after they trod on the toes of the tobacco 
mafia,” the magazine reported. 

“If Grinenko is making money in Russia, I mean, how do you do that without playing the [mob] game?” pondered an assistant U.S. 
attorney in New York who believes that his activities in the former Soviet Union create the potential for a conflict of interest. Grinenko 
responded: “They don’t know what they are talking about. You can work over there if you know what you’re doing.” The Brooklyn DA’s 
office declined to comment. 


Komorov, who headed a vicious extortion ring, also allegedly ran a complex advance fee scheme in which five Russian- American 
“salesmen” were sent to a trade show in Moscow in 1992, where they sold nonexistent electronic equipment and foodstuffs to some 
twenty Russian enterprises. It worked in this manner: In January 1992, according to a classified FBI report, a number of Russian and 
Ukrainian emigres affiliated with a major Eurasian crime group “established an agreement with a scientific center in Russia for the use of 
the facilities and a bank account. They also established a front company and a respective commercial bank account in New York City. 
The bank account was opened with a false New York State driver’s license. The address was a mail drop. Seized documents revealed 
approximately thirty other bank accounts associated with the New York front company. False identities of prominent U.S. citizens were 
used to open the accounts and establish short-term credit for the fraud scheme in Russia. 

“Five persons acting as representatives of the front company subsequently perpetrated an advance fee scheme at a business 
exposition in Moscow,” says the FBI report. ‘They sought out buyers of computer equipment and consumer goods, offering low prices. 
More than 20 Russian enterprises were victimized, making advance payments of over $6 million to the scientific center account. The 
front company then transferred the money to their other accounts without fulfilling contract obligations. The FBI and MVD [The Russian 
Internal Affairs Ministry] have traced $1 m illio n of the illicit proceeds to New York City.” 

Of the five “salesmen,” one accepted a plea bargain and received a five -month jail term. Two others cooperated with the 
government and entered the Federal Witness Protection Program. Another “salesman” was captured by the Russian authorities and 
imprisoned, and a fifth is still waiting to be sentenced in New York. Komorov was never charged. 


Disillusioned with the Russian Revolution and his failed marriages to the American dancer Isadora Duncan and to Sophia Tolstoy, 
Yesenin committed suicide in 1925. His poetry celebrated peasant life and nature. 


1 In the summer of 1999, Kobzon’s suite of luxury offices at the Intourist Hotel inside the same building that houses the Twenty First 
Century Association was bombed. Kobzon escaped injury. 


1 A copy of Ivankov’s personal phone book, which was obtained by the author, included a working number for the Trump Organization’s 
Trump Tower Residence, and a Tramp Organization office fax machine. 


Russian military materiel moving through organized crime channels has already begun to result in the spread of former Soviet weapons 
to militants, nationalists, and cri min als throughout the world, says a confidential threat assessment report about the Russian Mafiya 
prepared by the U.S. Department of Energy. In the first half of 1992, 25,000 firearms were reported missing from military depots, 
including 2,000 AK series rifles, AK-74SU assault carbines, and medium and heavy support weapons. In December 1992, police seized 
768 firearms, including seven grenade launchers, 574 submachine guns, and 159 pistols. Near the Black Sea port of Adler, police detained 
a high-speed boat carrying two missile launchers, a machine gun, two grenade launchers, and four submachine guns. 

In 1997, two Lithuanians linked to the Russian mob were arrested in Miami trying to sell tactical nuclear weapons and Bulgarian- 
made shoulder-held antiaircraft missiles to U.S. Customs undercover agents posing as drug smugglers. The Lithuanians were caught on 
audio- and videotape negotiating the sale in a series of meetings in seedy hotels in London and Miami. The Customs agents didn’t have 
the $330,000 asking price for the antiaircraft missiles, so the mobsters sold the weapons to Iran. 

Russian mobsters have also attempted to traffic weapons-grade fissionable material, using a global distribution network to smuggle it 
to renegade states and drug cartels, say officials from the Energy Department, the FBI, and the CIA. There have been at least sixteen 
cases in which police have interdicted plutonium or highly enriched uranium coming out of the former Soviet bloc since 1992. In one 
instance, approximately six pounds of fissionable material stolen from Russia was seized in Prague in December 1994. On September 24, 
1999, a cache of stolen uranium was intercepted by Georgian authorities near the Georgian- Turkish border. 


1 Komorov caused a stir when the Washington Times revealed that the alleged mobster was the key organizer for a September 1997 
star-studded gala concert at Carnegie Hall in celebration of Moscow’s 850th birthday. Moscow’s mayor unsuccessfully lobbied Secretary 
of State Madeleine Albright to lift the State Department’s travel ban on Joseph Kobzon so he could come to New York and sing at the 
festivities. 


1 Ultimately, Ivankov’s treatment of irksome journalists turned deadly. Vladimir Listyev, the director of Russian public television and a 
man as beloved as Walter Cronkite in this country, had fearlessly spoken out against the mob’s attempt to steal the lucrative advertising 
revenue from his top-rated show Ostankino and other newly privatized programming. In March 1995, Listyev was shot in the head near 
his Moscow apartment. The hit was allegedly the joint effort of several mob groups, including Ivankov and his acolyte Sliva. 


1 Petrossov almost didn’t get into the United States in the first place. He was twice banned from obtaining a U.S. visa at the American 
embassy in Moscow, and put on a list of rejected applicants. V B. Rushailo, chief of the MVD’s organized crime section in Moscow, sent 
a letter to U.S. officials warning that Petrossov was considered a dangerous thief-in-law. So Petrossov traveled to Riga, Latvia, and 
applied for a visa with a clean passport, without mentioning Iris previous conviction, which is required under U.S. law, whether it has been 
expunged or not. A frustrated State Department source says Petrossov slipped through the American security net because the Riga 
embassy was using an outmoded computer system. 

Like Ivankov, Petrossov’s U.S. visa was sponsored by an American film company. Its name was International Home Cinema Inc. of 
Santa Monica, California. Its chairman, Rafigh Pooya, an Iranian, was working on a $500, 000-budget, Days of Our Lives-style potboiler 
set in Baku, Azerbaijan. A film maker friend referred Pooya to Petrossov, then living in Moscow, who invested $50,000 in the production 
under the name of his company, Inter-cross International. As Pooya tells it, Petrossov contacted him one day asking to visit his 
investment. Pooya wrote a letter of recommendation to the U.S. embassy inviting Petrossov to be his guest. Petrossov, whom Pooya 
described as a “small man with a small round face,” turned up with a “fat lawyer and an associate.” Pooya said they weren’t interested 
in screening rushes, but instead bragged about jetting around North America, visiting their other investments. 

The FBI says Pooya ’s “company is known to have issued previous invitations which have been suspected of being fraudulent.” 

“Allegations, allegations,” Pooya says indignantly. 


As for Republic, just as it was being acquired in September 1999 by HSBC Holdings PLC of London for $10.3 billion, U.S. federal 
prosecutors and banking regulators launched an investigation into its securities unit for massive fraud, centering on allegations that the 
head of the unit vastly inflated the value of an investment fund in which Japanese investors had placed more than $1 billion. The federal 
government charged in the indictment that the unit’s head, Martin Armstrong, siphoned more than $500 m illio n of investors’ money in a 
giant Ponzi scheme in an apparent attempt to hide enormous trading losses. Republic’s stock tanked in response, sparking rumors that the 
deal with HSBC might fall through. Although Republic cooperated with the investigation, it was legally liable for the lost funds. In 
November 1999, Safra accepted $450 m illio n less than was made in the first offer for his controlling stake in the company. “Safra also 
agreed to be personally liable for up to an additional $180 million in costs related to the investigation beyond an already agreed and 
undisclosed sum,” according to the New York Times. 

On December 3, 1999, Safra was asphixiated by a thick, smoky fire in his Monte Carlo apartment complex set by a male nurse. The 
attack came during the final stages of the purchase of Republic Bank by HSBC. 


1 Although Vladimir Berkovich has no cri min al record in the United States, his son, Oleg, was convicted in Los Angeles of solicitation to 
commit murder on October 11, 1989. He was sentenced to four years. Oleg’s business card identified his employer as Magnex Ltd., a 
company owned by Mogilevich in Budapest. Oleg’s uncle, the colorful Lazar Berkovich, arrived in New York after having survived a 
shoot-out in 1978 with Italian gangsters, says his brother Vladimir. The FBI says Lazar was head of Russian cri min al activities in Italy, 
involved in the trafficking of antique relics, homicide, and robbery prior to escaping from Italian authorities and coming to the United 
States with the help of Mogilevich to recuperate from wounds suffered in his clash with the Italian Mafia. 


Jacob Bogatin was certainly no stranger to the mob. His brother, David, is a top Russian crime figure in America, who once fought in 
North Vietnam for the Soviets in an antiaircraft unit, and is now serving an eight-year term in a New York State prison for a multimillion- 
dollar gasoline tax fraud scheme. Just prior to trial, David Bogatin had jumped bail, fleeing to Poland, where he set up the country’s first 
commercial banks, which moved vast sums of money controlled by Russian wiseguys. He lived like royalty in a five-star Viennese hotel, 
surrounded by 125 Polish parachutists, some of them bedecked in shiny gold uniforms. Eventually, he was apprehended and returned to 
the United States. David Bogatin’s European businesses were taken over by Sergei Mikhailov, who later sold them. (Before he fled the 
United States, he turned over his mortgages for five pricey Trump Tower apartments to a Genovese associate. The mortgages were 
liquidated and the funds were moved through a Mafia-controlled bank in Manhattan’s Chelsea.) 


1 Another key stockholder was Mogilevich associate Alexei Viktorovich Alexandrov, aka “the Plumber.” His nickname stemmed from his 
deft handling of “leaks” and planting disinformation for Mogilevich’s organization. He was also Mogilevich’s contact with the Hungarian 
National Police, and the source of derogatory information on Mogilevich’s competitors. Based in Prague, the Plumber was also 
responsible for procuring Russian women for Mogilevich’s sex market. Like many of Mogilevich’s colleagues, he is well educated, 
holding degrees in economics and engineering, as a classified FBI document reveals. The FBI also reports that he has an address in Los 
Angeles. Alexandrov, a director of Arigon Ltd., was one of the five who were declared persona non grata after the incident at the U 
Holubu nightclub. 


Succumbing to persistent pressure from the Russian government, the Israeli police finally arrested Lerner in May 1997 as he was about 
to board a flight to the United States. He was charged with attempted bribery, defrauding four Russian banks of $106 million, and 
attempting to set up a bank in Israel to launder money for the Russian Mafiya. Lemer pleaded guilty to bank fraud and bribing 
government officials on March 22, 1998, after having fiercely maintained for months that he was a victim of an Israeli government plot to 
discredit Russian emigre entrepreneurs.